Macro, chapter 13

If the federal government's tax revenues are greater than its outlays, then the federal budget has a

surplus.

A budget surplus occurs when government

tax revenues exceeds outlays.

In 2013, the U.S. government budget had a deficit. By definition, then,

tax revenues were less than government outlays.

A government incurs a budget deficit when

taxes are less than government outlays.

A discretionary fiscal policy is a fiscal policy that

requires action by the Congress.

A country has been in existence for only two years. In the first year, tax revenues were $1.0 million and outlays were $1.5 million. In the second year, tax revenues were $1.5 million and outlays were $2.0 million. At the end of the second year, the total government debt was ________.

$1 million

Suppose that real GDP equals potential GDP, but the government believes that the economy is in a below full-employment equilibrium. As a result, the government increases its expenditure on goods and services. In response to the government's fiscal policy,

aggregate demand will increase.

Suppose the economy is at a short-run equilibrium with real GDP greater than potential GDP. Which of the following fiscal policies would decrease real GDP and the price level?

an increase in taxes.

A fall in income that results in a decrease in tax revenues is an example of ________.

automatic fiscal policy

If the government has a balanced budget, the total amount of government debt is

constant.

Suppose real GDP exceeds potential real GDP. If the government decreases its expenditures on goods and services, then real GDP ________ and the price level ________.

decreases; falls

If the government wants to engage in fiscal policy to increase real GDP, it could

increase government expenditure in order to increase aggregate demand.

During an expansion, tax revenues ________ and government transfer payments ________.

increase; decrease

A government that currently has a budget deficit can balance its budget by ________.

increasing tax revenues by more than it increases outlays

If the government runs a deficit, the total amount of government debt is

increasing.