Chap 9&11

An example of discretionary fiscal policy would be

A tax cut adopted to stimulate consumption

The purpose of fiscal policy is to

Alter the direction of the economy

Fiscal policy is purposeful movements in _______ designed to direct an economy

Govt spending and taxes

In 2011, the largest item in the federal budget was

Medicaid

A political problem with discretionary fiscal policy is the

Political business cycle

A continuing resolution allows

Spending to continue as it has been for a specified period of time

Discretionary fiscal policy differs from nondiscretionary fiscal policy in that

The former requires timely decisions whereas the latter is built into the system

What is an example of govt transfer payments?

Unemployment funds paid

Short-run contractionary fiscal policy would result in

AD moving to the left

Short-run expansionary fiscal policy would result in

Aggregate demand moving to the right

Using current services budgeting

An increase in spending is spending greater than that needed to provide an unchanged level of services

Authorization in 2009 of increased federal spending on "shovel-ready" infrastructure projects was intended to speed up the macroeconomic impact of the deficit spending by

Avoiding the lengthy design phase of the projects

Compared to other industrialized nations around the globe, U.S. defense spending as a percentage of GDP is

Substantially higher than that of the next highest nation

An example of nondiscretionary fiscal policy would be

The existence of the progressive federal income tax

How is the federal income tax a progressive tax?

The higher the income a person has, the higher the percentage that person pays in tax

What describes the operational lag?

The time required to get a particular plan implemented with the money getting in peoples hands

What's described as the recognition lag?

The time required to know that there's a recession

If you were to use an aggregate supply aggregate demand diagram to model nondiscretionary and discretionary fiscal policy in reaction to a negative aggregate demand shock, you would see the aggregate demand curve move

To the right, back toward its pre-shock position as a result of these policies

What qualifies as an aggregate supply shock

Unexpected increase in oil prices

What qualifies as an aggregate demand shock

Unexpected reduction in consumer confidence

Mandatory spending makes up

Well over half of all spending

Spending on programs for which there is an existing legal obligation is labeled

Mandatory

Projections of the trajectory of discretionary relative to mandatory spending made in 2011 had

Mandatory spendings portion growing

Logrolling occurs when

Members of Congress trade votes to get their programs passed

Fiscal policy is controlled by

Congress and the president

The enormous budget deficits of 2009 through 2011 meant that the federal govt was borrowing upwards of $1.5 trillion per year. If that borrowing has limited the ability of the private sector to get financial capital for its purposes economists would call this

Crowding in

The tax cuts of 2001 and 2003 that came in the form of tax rebate checks are good examples of _____ fiscal policy

Discretionary

Programs such as social security and Medicare

Do not require re-authorization

Which of the following is part of non-defense discretionary spending?

Education and training

What defines a means-tested program?

Eligibility depends on income