Macroeconomic chapter 12 and 13

A decrease in taxes is one way to pursue a contractionary fiscal policy because it will make government revenues contract.

False

Fiscal policy will still achieve its objectives even if households expect future reversals of policy.

False

The aggregate-expenditures schedule relates total spending with the price level, while the aggregate demand schedule relates total demand for output with income.

False

The upward slope of the short-run aggregate supply curve is constant.

False

Which would tend to reduce the crowding-out effect that occurs when the federal government increases its borrowing to finance a deficit?

The economy is operating at less than full employment.

A progressive tax is a tax whose average tax rate increases as the taxpayer's income increases.

True

More than half of the U.S. public debt is owed to Americans.

True

The short-run aggregate supply curve has

a slope that is flatter at outputs below the full-employment output level and steeper at outputs above it.

An increase in investment and government spending can be expected to shift the

aggregate-expenditures curve upward and the aggregate demand curve rightward.

The economy starts out with a balanced federal budget. If the government then implements expansionary fiscal policy, then there will be a

budget deficit.

Higher interest rates may cause

consumers to decide not to purchase a new house or new automobile, businesses to postpone a potential purchase of capital.

The set of fiscal policies that would be most contractionary is a(n)

decrease in government spending and an increase in taxes.

The short-run aggregate supply curve shows the

direct relationship between the price level and real GDP produced.

Suppose the government purposely changes the economy's cyclically-adjusted budget from a deficit of 0 percent of real GDP to a deficit of 3 percent of real GDP. The government is engaging in a(n)

expansionary fiscal policy.

The aggregate supply curve (short-run) is upsloping because

per-unit production costs rise as the economy moves toward and beyond its full-employment real output.

From 2020 to 2021, the actual as well as the cyclically-adjusted federal budget deficits as percentages of GDP in the U.S.

rose substantially.

When current tax revenues exceed current government expenditures and the economy is achieving full employment,

the cyclically-adjusted budget has a surplus.

The operational lag is

the delay between the time fiscal action is ordered and the time that it actually begins to affect output, employment, or the price level.

The cyclically-adjusted budget estimates the federal budget deficit or surplus if

the economy was at full employment.

One important reason why the United States government is not likely to go bankrupt even with a large public debt is that it has

the power to print money to finance the debt.

Per-unit production cost is

total input cost divided by units of output.

The upward slope of the short-run aggregate supply curve is based on the assumption that

wages and other resource prices do not respond to price level changes.

Suppose that real domestic output in an economy is 70 units, the quantity of inputs is 10, and the price of each input is $49. The per-unit cost of production in the economy described is

$7

In 2021, the public debt in the U.S. on a per capita basis was about

$84,000.

An economy is employing 2 units of capital, 5 units of raw materials, and 8 units of labor to produce its total output of 640 units. Each unit of capital costs $10; each unit of raw materials, $4; and each unit of labor, $3. The per-unit cost of production in this economy is

$0.10.