Quiz 17 Econ 100c

An income tax hike

Decreases potential GDP

If the economy is in equilibrium with real GDP less than potential GDP, there is _______ gap and a fiscal policy that ______ is appropriate.

A recessionary; increases aggregate demand

Government expenditure ___ change potential GDP and taxes ___ change potential GDP.

Can; can

Which of the following is an example of an automatic fiscal policy action?

Increased unemployment payments resulting from higher unemployment

Needs-tested spending

Increases as unemployment increases.

If government expenditure on goods and services increase by $100 billion, then aggregate demand

Increases by more than $100 billion

Discretionary fiscal policy is defined as fiscal policy

Initiated by an act of congress

President rehab often stated he preferred supply side policies. Which of the following federal government policies would be considered supply side ?

Lower taxes (ii only)

When tax revenue______ outlays is negative, then the government has a budget _____

Minus; surplus

The structural deficit is the deficit

That would occur at full employment