Econ quiz 7
The government has a budget deficit if
its total revenues are less than its total expenditures.
The cyclically adjusted budget deficit fluctuates ______ the actual budget deficit.
less than
Expansionary fiscal policies:
make the budget surplus smaller.
The federal government's largest source of tax revenue is:
personal income and corporate profit tax
When the unemployment rate increases, the budget:
tends to move into deficit.
The federal budget tends to move toward _____ as the economy ____.
Deficit; Contracts
The multiplier effect of changes in government purchases of goods and services is equal to:
1/(1-mpc)
If the MPC is 0.9, then the government spending multiplier is:
10
If the marginal propensity to save is 0.25, and the government increases its purchases of goods and services by $100 million, then real GDP increases by:
400 Mill
Suppose that U.S. debt is $7 trillion at the beginning of the fiscal year. During the fiscal year, the government spending and government transfers are $2 trillion and tax revenues equal $1.5 trillion. At the end of the fiscal year, the debt is:
7.5 trillion
Which is NOT a method of fiscal policy?
Changes in the money supply
Suppose the economy is in a recessionary gap. To move equilibrium aggregate output closer to the level of potential output, the best fiscal policy option is to:
Decrease taxes
The 2009 U.S. stimulus was a(n) _________ fiscal policy that ________ aggregate demand.
Expansionary; increased
In the basic equation of national income accounting, the government directly controls _____ and influences ______.
G;C and I
When the budget is in deficit, the government generally:
Increases the public debt
A $100 million increase in government spending increases equilibrium GDP by:
More than 100 mill
All are sources of federal tax revenue EXCEPT:
Sales taxes
Government payments to households for which no good or service is provided in return are called:
Transfer payments
What can the federal government do to finance a deficit?
borrow funds
Changes in the budget balance
can be both the result of and the cause of changes in the economy.