Fiscal Policy

Which of the following are considered tools of fiscal policy?

Changes in government spending; changes in taxes

Is the application of fiscal policy to decrease aggregate demand; Involves decreasing government purchases and/or increasing taxes

Contractionary fiscal policy

Is the application of fiscal policy to decrease aggregate demand; Involves decreasing government purchases and/or increasing taxes.

Contractionary fiscal policy

Changes in government purchases and/or taxes designed to achieve full employment and low inflation is called

Fiscal policy

The concept that an additional dollar of expenditures will result in the creation of more than one dollar's worth of real GDP

Multiplier effect

A decline in real output for at least two consecutive quarters is called

a recession

A phase of the business cycle characterized by increasing real GDP, income, and employment is called

an expansion

The short-term fluctuations experienced in the economy due to changes in level of economic activity refers to the _________ cycle

business

This policy involves decreasing government purchases and/or increasing taxes

contractionary fiscal policy

When taxes increase, AD:

decreases

A decrease in expenditures causes the aggregate __________ curve to shift tot he left.

demand

The level of real GDP produced in an economy when it is operating at the natural rate of unemployment is called full __________ GDP

employment

The application of fiscal policy to increase aggregate demand is called ________ fiscal policy

expansionary

The application of fiscal policy to increase aggregate demand is called ___________ fiscal policy

expansionary

Involves increasing government purchases and/or decreasing taxes

expansionary policy

Full employment and low inflation can fostered using both ________ and __________ fiscal

expansionary; contractionary

An increase in transfer payments has an effect on the economy similar to

explicitly increasing government purchases, which is the active fiscal policy prescriptions a country in recession

Expansionary __________ policy stimulates aggregate demand and expands output by lowering taxes, increasing government purchases, or some combination of the two

fiscal

The level of real GDP produced in an economy when it is operating at the natural rate of unemployment is called

full-employment GDP

Because the U.S. Federal income tax is a progressive tax, as income __________ (increases/decreases) average federal tax rates increases

increases

Expansionary fiscal policy

involves increasing government purchases and/or decreasing taxes; Is the application of fiscal policy to increase aggregate demand

The condition Y=Yfull employment refers to _______- ___________ equilibrium

long run

The concept that an additional dollar of expenditures will result in the creation of more than one dollar's worth of real GDP is called the __________ effect

multiplier

Exports minus imports gives us _______ exdports

net

Increasing government spending on national defense to replace an outdated naval fleet is

not referred to as fiscal policy

Consumption (C) + Gross Investment (I) + Government Purchases (G) + Net Exports (NX) characterizes

real GDP expenditures

The condition AD=AS determines the _____-______ equilibrium

short run

One of the most frequently used tools of fiscal policy is changing

taxes