Macroeconomics

If the government for the state of Washington collects 65.8 billion in tax revenues in 2017 and total spending in the same year is 74.8 billion, the result will be

A budget deficit

Refer to the graph. Which of the following factors will shift AD1 to AD3?

A decrease in consumer wealth

When the interest rate in an economy increases, it is likely the result of either

A decrease in the government's budget surplus or an increase in its budget deficit

The graph refers to a significant increase in oil prices. which of the following is likely to result?

A rise in inflation from 2.0% to 3.0%

If the dollar appreciates in value relative to foreign currencies:

Aggregate demand decreases because net exports decrease

which of the diagrams for the US economy best portrays the effects of a decrease in the availability of key natural resources?

B

A decrease in aggregate demand in the short run will reduce

Both real output and the price level

which of the diagrams for the US economy best portrays the effects of a substantial reduction In government spending?

D

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

D. Decrease in government spending and an increase in taxes

An Increase in the government's budget surplus will cause the interest rate to

Decrease

The factors that affect the amounts that consumers, businesses, government, and foreigners wish to purchase at each price level are the

Determinants of aggregate demand

Whether the economy is in a recession is illustrated in the AD/AS model by how close the _____________________ is to the potential GDP line.

Equilibrium

If the price level of what firms produce is rising across an economy, but the cost of production are constant, then

Higher profits will induce expanded production

The crowding-out effect suggest that

Increases in government spending may reduce private investment

If South Dakota's governor reports a budget surplus in 2011, that state government likely:

Received more in taxes than it spent in the year

One timing problem in using fiscal policy to counter a recession is the "recognition lag" that occurs between the

Start of the recession and the time it takes to recognize that the recession has started

When the dollar appreciates relative to foreign currencies, it means that

The value of foreign currencies decreased relative to our dollar

The graph above refers to a significant increase in individual income taxes, taking them to their highest level in 50 years. Which of the following is likely to result?

Unemployment is likely to rise

Other things equal, appreciation of the dollar

decreases aggregate demand in the US and may increase aggregate supply by reducing the prices of imported resources.

Whether the economy is in a recession is illustrated in the ADAS model by how close the ______________ is to the potential GDP line

equilibrium

The intersection of the aggregate supply curves determines the

equilibrium level of real domestic output and prices

Which of the following is not a consequence of an increase in the government's budget deficit?

exports increase while imports and all other variables are held constant

A ____________ is calculated as a flat percentage of income earned, regardless of level of income

proportional tax

The label for the axes of the aggregate demand graph should be

real domestic output on the horizontal axis and price level on the vertical axis.

A major advantage of the built-in or automatic stabilizers is that they

require no legislative action by Congress to be made effective.

other things equal, an improvement in productivity will

shift the aggregate supply curve to the right.

The crowding out effect is

strongest when the economy is at full employment.

The crowding-out effect arises when

Government borrows in the money market, thus causing an increase in interest rates

In an AD/AS model, the point where the economy has excess capacity is called the:

Keynesian zone of AS curve

A typical ___________ fiscal policy allows government to decrease the level of aggregate demand, through increases in taxes

contractionary

If a country's economic data shows that private savings equal $300 million, government spending equals $400 million, and taxes equal$300, and the trade surplus equals $100 million, then what does investment equal?

$100 million

Refer to the accompanying graph. What combination would most likely cause a shift from AD1 to AD3

an increase in taxes and a decrease in government spending

A government deficit has increased from 100 to 60. The country's trade deficit is 120 and a private savings equals 80 and investment equals 100. If Ricardian neutrality holds true, after this change in the government's budget, private savings will equal:

40

Because the difference between the discipline imposed by market competition and the discipline imposed by political decisions, which of the following is most likely?

Difficulty managing public investment so its done in a cost effective way

which of the following must be present in order for the aggregate supply curve to form an upward slope?

fixed costs of inputs combined with rising prices for outputs

Discretionary fiscal policy is so named because it

involves specific changes in taxes and government spending undertaken expressly for stabilization at the option of Congress.

If an economy has a budget deficit of 600, private savings of 2,000, and investment of 800. What is the balance of trade in this economy?

surplus of 600