Christina's Quizlet
The table shows the receipts and the outlays of a nation at each level of real GDP. What is the budget deficit when real GDP is $4 trillion? The table said that when the real GDP is $4 trillion, the receipts were $0.2 trillion and the outlays were 0.4.
$0.2 trillion
Based on the this link of a data table: https://o.quizlet.com/-sDYhR9W4V2PpvdxfNhg6A_b.png In August 2017, the real interest rate was _____ %. [AND] Between April 2017 and August 2017, the real interest rate _____________.
1.7% [AND] increased
The graph shows an economy that has no taxes or imports. AD0 is the aggregate demand curve when investment is $1.0 trillion, and AD1 is the aggregate demand curve when investment is $1.5 trillion. What is the size of the multiplier in the short run? LOOK AT THE IMAGE ADDRESS: https://o.quizlet.com/aD4Lkjz8JsTxsVeZfIksfQ_b.png The size of the multiplier in the short run is ______.
4
Fiscal policy attempts to achieve all of the following objectives except ______. A. a stable money supply B. sustained economic growth C. full employment D. price level stability
A. a stable money supply
The consequences of deflation include all of the following except _______. A. falling real wage rates for workers with long-term wage contracts B. a decrease in real GDP and employment C. employers hire fewer workers D. redistribution of income and wealth
A. falling real wage rates for workers with long-term wage contracts.
Choose the statement about the long-run Phillips curve that is incorrect: A. It tells us that any expected inflation rate is possible at the natural unemployment rate. B. An unexpected increase in aggregate demand shifts the long-run Phillips curve rightward. C. It shows the relationship between inflation and unemployment when the actual inflation rate equals the expected inflation rate. D. It is vertical at the natural unemployment rate.
B. An unexpected increase in aggregate demand shifts the long-run Phillips curve rightward.
Choose the statement that is incorrect: A. financial institution is illiquid if it has made long-term loans with borrowed funds and is faced with a sudden demand to repay more of what it has borrowed than its available cash. B. If a financial institution's net worth is positive, the institution must be solvent and liquid. C. A financial institution can be solvent but illiquid. D. A financial institution's net worth is the market value of what it has lent minus the market value of what it has borrowed.
B. If a financial institution's net worth is positive, the institution must be solvent and liquid.
Choose the statement that is incorrect: A. A one-time fall in the price level occurs either because aggregate demand decreases or because short-run aggregate supply increases. B. A one-time fall in the price level occurs when there is an increase in capital that increases potential GDP. C. In a deflation, the inflation rate is positive but decreasing in consequent years. D. In a deflation, the price level persistently falls.
C. In a deflation, the inflation rate is positive but decreasing in consequent years.
What are commercial banks?
Commercial banks are financial institutions that accept deposits, provide payment services, and make loans to firms and households.
__________ maintains that tax policy can either create or destroy incentives to work, save, and invest.
Supply-side theory
How can the change in U.S. wealth differ from U.S. saving?
The change in wealth includes changes in the prices of assets owned and saving excludes these items.
A mortgage is _______.
a legal contract that gives ownership of a home to the lender in the event that the borrower fails to meet the agreed loan payments (repayments and interest)
Deflation is _______.
a persistently falling price level.
Deflation occurs when _______.
aggregate demand increases at a persistently slower rate than aggregate supply.
This question goes with the graph before: Over time, on average the demand for loanable funds ______, so the real interest rate ______.
and the supply of loanable funds increase at a similar pace; has no trend
The multiplier is the amount by which the change in ______ expenditure is magnified or multiplied to determine the change in equilibrium expenditure and real GDP. For every dollar increase in ______ expenditure, the multiplier determines the increase in real GDP.
autonomous; autonomous
The multiplier is the amount by which a change in ______ expenditure is magnified or multiplied to determine ______. To calculate the multiplier, we divide ______ by ______.
autonomous; the change in equilibrium expenditure and real GDP. the change in equilibrium expenditure; the change in autonomous expenditure.
If the government increases its expenditure on goods and services and as a result, the money wage rate increases, the economy has experienced _______.
a demand-pull rise in the price level.
A government that collects more in taxes than it spends experiences a:
budget surplus
If the federal government's expenditures are less than its revenue, there is a __________.
budget surplus
Supply-side economists point to the Laffer curve as evidence that higher taxes:
can lead to lower overall government revenues.
The decline in private expenditures that results from an increase in government borrowing is known as:
crowding out.
An increase in current income taxes ______ the supply of loanable funds today because it ______. An increase in expected future income ______.
decreases; decreases disposable income, which decreases saving. decreases the supply of loanable funds today because households with larger expected future income will save less today
The multiplier increases when the marginal propensity to import _______________ or the income tax rate _______________.
decreases; decreases.
Which type of fiscal policy would cause the shift of the AD curve to the right to AD1?
higher govt. spending
What are the three sources of global investment funds?
household saving, govt. budget surplus, and borrowing from the rest of the world.
The natural unemployment rate is 6 percent and the expected inflation rate is 10 percent a year. Draw the long-run Phillips curve. Label it LRPC0. Draw the short-run Phillips curve. Label it SRPC0. Draw a point at the natural unemployment rate and the expected inflation rate. Label it 1. Now the natural unemployment rate rises to 9 percent with no change in the expected inflation rate. Draw and label LRPC1. Draw and label SRPC1. Draw a point at the natural unemployment rate and the expected inflation rate. Label it 2.
https://o.quizlet.com/4plYWbHdFk680Blr594F.g_b.png
The graph shows demand for loanable funds curve. Suppose the real interest rate rises. Draw either an arrow along the demand curve showing the direction of change or a new demand curve.
https://o.quizlet.com/DR.CiJjq2X6jewYudGQ2eA_b.png
An increase in households' expected future disposable income occurs. Draw a curve that shows the effect of this event. Draw a point at the new equilibrium quantity of loanable funds and the new equilibrium real interest rate.
https://o.quizlet.com/LhR01XkgzDtBFUPnVpB44A_b.png
The graph shows the loanable funds market. During the 1990s, the invention and use of fiber-optic technologies required billions of dollars to be spent laying new cables under the oceans and launching communications satellites. Draw a curve that shows the effect of this event. Label it. Draw a point to show the new equilibrium quantity of loanable funds and real interest rate.
https://o.quizlet.com/M3GttzJwjLSM3brlyo44dw_b.png
The graph shows the loanable funds market when there is neither a government budget surplus nor a government budget deficit. Draw a point at the equilibrium quantity of loanable funds and the equilibrium real interest rate. Label it 1. Now suppose that the government has a budget deficit of $1 trillion. Draw a curve that shows the effect of this deficit in the loanable funds market. Label it. Draw a point at the new equilibrium real interest rate and quantity of saving. Label it 2. Draw a point to show investment when the government budget deficit is $1 trillion. Label it 3.
https://o.quizlet.com/MP3vLKeKc39queIkppOLtg_b.png
Show the effect on the real interest rate and equilibrium quantity of loanable funds of a decrease in the demand for loanable funds and an even larger decrease in the supply of loanable funds. Draw a demand for loanable funds curve. Label it DLF0. Draw a supply of loanable funds curve. Label it SLF0. Draw a point at the equilibrium real interest rate and quantity of loanable funds. Label it 1. Draw a curve that shows a decrease in the demand for loanable funds. Label it DLF1. Draw a curve that shows an even larger decrease in the supply of loanable funds. Label it SLF1. Draw a point at the new equilibrium real interest rate and quantity of loanable funds. Label it 2.
https://o.quizlet.com/RIWDG6eAcBibqlEfwzdRsA_b.png
The graph shows the loanable funds market when there is neither a government budget surplus nor a government budget deficit. Draw a point at the equilibrium quantity of loanable funds and the equilibrium real interest rate. Label it 1. Now suppose that the government has a budget surplus of $1 trillion. Draw a curve that shows the effect of this surplus in the loanable funds market. Label it. Draw a point at the new equilibrium real interest rate and quantity of investment. Label it 2. Draw a point to show private saving when the government budget surplus is $1 trillion. Label it 3.
https://o.quizlet.com/TdILzUQkA-L1nyF1plVtOA_b.png
In 2012, the Lee family had disposable income of $70,000, wealth of $140,000, and an expected future income of $70,000 a year. At a real interest rate of 22 percent a year, the Lee family saves $10,000 a year; at a real interest rate of 44 percent a year, they save $15,000 a year; and at a real interest rate of 66 percent, they save $20,000 a year. Draw a point to show the quantity of loanable funds supplied by the Lee family when the real interest rate is 1) 2 percent a year. Label it 1. 2) 4 percent a year. Label it 2. 3) 6 percent a year. Label it 3. Draw the Lee family's supply of loanable funds curve through the points. Label it.
https://o.quizlet.com/Vr0Z09ks00lEKFmnTrXKww_b.png
In 2012, the Lee family had a disposable income of $70,000, wealth of $280,000, and an expected future income of $70,000 a year. The graph shows the Lee family's supply of loanable funds curve. In 2013, suppose the stock market crashescrashes and default risk increasesincreases. Draw a new curve to show the effect of the change in default risk on the Lee family's supply of loanable funds curve. Label it.
https://o.quizlet.com/eUxhFu-VVLn5XzlkU4PMng_b.png
When the economy is at full employment, a cut in household taxes will __________.
increase consumption.
When the economy is in a recession, the government can:
increase government purchases or decrease taxes in order to increase aggregate demand.
The multiplier matters because we can use it to determine by how much we should change autonomous expenditure to ______.
increase real GDP by a given amount
A government budget deficit occurs, which ______. The real interest rate ______. Private saving ____________ and investment ____________.
increases the demand for loanable funds; rises. increases, decreases.
The multiplier increases when the marginal propensity to consume ________________.
increases.
The structural budget deficit or surplus:
is measured as if the economy were at full employment.
The three main types of markets for financial capital are _______.
loan markets, bond markets, and stock markets
An increase in income taxes _______, everything else remaining the same.
makes the multiplier smaller
This question goes with the graph before: When the real interest rate rises, the ______ because the ______ is the opportunity cost of loanable funds.
quantity of loanable funds demanded decreases; real interest rate
If a structural surplus exists but the government's budget is balanced, then ______.
real GDP < Potential GDP
An economy is at potential GDP when it experiences an increase in costs. The economy experiences _______.
stagflation.
A government budget surplus occurs, which increases the ______________ ____ loanable funds. The real interest rate ______, household saving ______,
supply of falls; decreases and investment increases
A cost-push rise in the price level can arise from an increase in _______.
the money wage rate or money prices of raw materials.
Quote: "The G-20 aims to take stock of the economic recovery. One achievement in Pittsburgh could be a deal to require that financial institutions hold more capital." Questions: The "capital" referred to in the news clip is ______. The financial institutions that the G-20 might require to hold more capital are ______. The requirement to hold more capital can make financial institutions safer because by using more of its own funds and less borrowed funds, a financial institution ______.
the institutions' own funds; banks and insurance companies decreases its risk of insolvency.
If the expected inflation rate increases and the natural rate of unemployment remains constant, then _______.
the short-run Phillips curve shifts upward and the long-run Phillips curve does not shift
Physical capital is ______. Financial capital is ______. Examples of physical capital are ______. Examples of financial capital are ______.
the tools, instruments, machines, buildings, and other items that have been produced in the past and that are used today to produce goods and services; the funds that firms use to buy physical capital. ovens used by Pizza Hut and lawn mowers used by Larry's Mowing; bonds issued by Wal-Mart and stocks issued by Boeing.
Choose the statement that is INCORRECT: A. When full employment returns in 2018, the CBO says that the cyclical deficit will continue to be large. B. According to the CBO, the U.S. economy had a structural deficit in 2012. C. According to the CBO, the U.S. economy had a cyclical deficit in 2012. D. The structural deficit was small in 2007, increased in 2008, and exploded in 2009.
A. When full employment returns in 2018, the CBO says that the cyclical deficit will continue to be large.
Potential GDP is $12 trillion and if real GDP equaled potential GDP, the budget deficit would be $1 trillion. Real GDP actually equals $14 trillion and the budget surplus is $3 trillion. The economy has a structural ______ and a cyclical ______.
deficit of $1 trillion; surplus of $4 trillion
Government policies that increase aggregate demand are called __________.
fiscal stimulus
Draw a curve that shows the relationship between the tax rate and the amount of tax revenue collected.
https://o.quizlet.com/FNBQLi0QXnaUvsJhD1VjNg_b.png
Potential GDP is $10 trillion and actual real GDP is $8 trillion. The economy has a structural deficit of $1.5 trillion and an actual deficit of $2 trillion. The cyclical deficit is ______.
$0.5 trillion
A country has been in existence for only two years. In the first year, receipts were $1.0 million and outlays were $1.5 million. In the second year, receipts were $1.5 million and outlays were $2.0 million. At the end of the second year, the government had issued debt worth ______.
$1 million
The figure shows the labor market when an income tax is imposed. The tax wedge is ______.
$15/ hour
What is the budget balance when real GDP is $5 trillion? The chart read that when the Real GDP is $5 trillion, the receipts were 0.3 and the Outlays were 0.3.
0.0 trillion dollars
Categorize the following statements as either true or false: 1.) Congress can pass budget laws only once a year. 2.) For the US budget, the fiscal year runs from Jan. 1 to Dec. 31. 3.) The President has veto power to eliminate specific items in a budget bill and approve others. 4.) Congress debates and amends the President's budget proposals and enacts a budget before the start of the fiscal year on October 1st.
1. False 2. False 3. False 4. True
Which of these fiscal policy actions will increase real GDP in the short run?
An increase in government expenditures
Choose the statement that is INCORRECT: A. If the only consequence of increased govt. expenditure is crowding-out of investment, the govt. expenditure multiplier is less than 1. B. An increase in govt. expenditure increases govt. borrowing (or decreases govt. lending if there is a budget surplus) and lowers the real interest rate. C. The govt. expenditure multiplier is the quantitative effect of change in govt. expenditure on real GDP. D. If the only consequence of increased govt. expenditure is an increase in consumption expenditure, the govt. expenditure multiplier is greater than 1.
B. An increase in govt. expenditure increases govt. borrowing (or decreases govt. lending if there is a budget surplus) and lowers the real interest rate.
Choose the statement about U.S. international debt that is INCORRECT: A. In June 2014, the US had a net debt to the rest of the world of $11.7 trillion B. About 48% of the US govt. debt is held by foreigners C. To repay the international debt, US saving must increase and consumption must decrease D. Borrowing from the rest of the world as a source of loanable funds decrease during the late 1990s and 2000s
D. Borrowing from the rest of the world as a source of loanable funds decrease during the late 1990s and 2000s
According to the previous graph, Choose the CORRECT statement: A. A lower tax rate brings greater tax revenue B. A higher tax rate brings in more revenue per dollar earned, so a higher tax rate brings in greater tax revenue C. For tax rates below T*, a decrease in the tax rate increases tax revenue D. Tax cuts can increase tax revenue
D. Tax cuts can increase tax revenue
Choose the statement that is INCORRECT: A. The budget provides automatic stimulus in a recession to help shrink the recessionary gap. B. When the economy expands, needs-tested spending decreases C. Tax revenues and needs-tested spending change automatically in response to the state of the economy D. When real GDP decreases in a recession, the poor become poorer, but at the same time the rich become richer and tax revenues increase
D. When real GDP decreases in a recession, the poor become poorer, but at the same time the rich become richer and tax revenues increase
Which of these is the main reason for the long-run funding problems of Social Security?
Demographic changes
Which of the following statements about U.S. government receipts is CORRECT?
Federal receipts have ranged between 15 and 20 percent of gross domestic product for the past few decades.
Which of these would be a fiscal policy the government might want to use if the economy is operating at too high a level of output?
Increasing income tax rates
This question goes with the graph before: The relationship between the tax rate and the amount of tax revenue collected is called the ______ curve. This curve shows that ______.
Laffer; tax cuts can increase tax revenue
When a tax is applied to labor income, the result is a ______ full-employment quantity of labor and a ______ potential GDP.
Smaller; lower
Choose the CORRECT statements: 1. Upper A persistent budget deficit feeds itself.A persistent budget deficit feeds itself. 2. U.S. government debt left parenthesis as a percentage of GDP right parenthesis was at an all dash time high at the end of World War II.U.S. government debt (as a percentage of GDP) was at an all-time high at the end of World War II. 3. In 2014 comma Germany had a budget deficit.In 2014, Germany had a budget deficit. 4. Since 2002 comma U.S. government debt has been decreasing.
Statements 1 and 2
What happens when government spending is greater than government tax revenues?
There is borrowing by the government and the government debt rises.
When the government imposes a tax on labor income, ______ the production function occurs and potential GDP ______.
a leftward movement along; decreases
The best forecast available, which is based on all the relevant information is called _______.
a rational expectation.
The time between when an economic problem begins and policymakers determine there is a need for fiscal policy is known as:
a recognition lag.
Which of these is an example of an automatic fiscal policy?
an unemployment benefit program
A fall in real GDP that results in a decrease in personal income tax receipts is an example of ______.
automatic fiscal policy
Taxes and transfer payments that stabilize GDP without requiring explicit actions by policymakers are called __________.
automatic fiscal policy
This question comes from the graph before: A rise in the price of oil creates _______.
a one-time cost-push rise in the price level
Every time the federal government runs a budget deficit, the government must:
borrow, which adds to the government debt.
Changes in tax rates impact the economy through:
both aggregate demand and aggregate supply.
A government that spends more than it collects in taxes experiences a:
budget deficit
An increase in the income tax rate is an example of ______.
discretionary fiscal policy
The American Recovery and Reinvestment Act of 2009 is a clear example of:
discretionary fiscal stimulus.
When an economy is below full employment and the government has a budget deficit, that deficit ______.
exceeds the structural deficit
An economy at a full-employment equilibrium experiences an increase in aggregate demand. The unemployment rate ______ its natural rate, and to return to the long-run equilibrium, the money wage rate begins to ______.
falls below; rise.
Prior to the Great Depression, the purpose of the federal budget was to ______.
finance federal govt programs and activities
One of the primary goals of most governments with regard to the economy is:
full employment
An accounting system that measures the lifetime tax burden and benefits of each generation is called ______.
generational accounting
The division of the fiscal imbalance between the current and future generations, assuming that the current generation will enjoy the existing levels of taxes and benefits, is the ______.
generational imbalance
Which components of government outlays and receipts contributed most to the huge budget deficits in 2011 and 2012?
government expenditure and transfer payments
This question goes with the graph before: The quantity of investment and borrowing that firms plan to undertake depends on ______.
how productive capital is and what it costs
Draw a Laffer curve. Label it. Draw a point on the curve at the tax rate that generates the maximum tax revenue. Label it T*. Draw a point on the curve that shows the approximate location of the United States on the curve. Label it United States.
https://o.quizlet.com/GPqKbcHUJcNPiQp5EkFH4g_b.png
Budget deficits automatically __________ during recessions and __________ during expansions.
increase, decrease
Expansionary fiscal policy when the economy is below full employment ______ aggregate demand and real GDP, and the price level ______.
increases; rises
The cyclical surplus or deficit ______.
is the actual surplus or deficit minus the structural surplus or deficit
The structural surplus or deficit ______.
is the budget balance that would occur if the economy were at full employment
The _______ lag is the time it takes Congress to pass the laws needed to change taxes or spending.
law-making
According to supply-side theory, fiscal policymakers can combat the impact of recessions by:
lowering tax rates.
Which of the following is not a role played by the Budget Committees of the House of Representatives and the Senate in creating fiscal policy?
making the initial budget proposal in February
This question is from the graph before: If inflation is expected, _______.
neither a cost-push inflation nor a demand-pull inflation occur.
Most economists would __________ a balanced federal budget mandate.
not be in favor of
The ______ is an amount of money that, if invested today, will grow to equal a given future amount when the interest that it earns is taken into account.
present value
Fiscal imbalance is the ______ value of the government's commitments to pay benefits minus the ______ value of its tax revenues.
present; present
Four alternative fiscal policy changes that could be made to help the federal government meet its Social Security obligations are _______ income taxes, ________ Social Security taxes, _________ Social Security benefits, and ________ federal government discretionary spending.
raise, raise, cut, cut
We would expect the tax multiplier to be __________ in absolute value than the government purchases multiplier.
smaller
The government debt is best measured as the:
sum of past budget deficits minus the sum of past budget surpluses.
Supply-side economics emphasizes the role that __________ play in the supply of output in the economy.
taxes
This question is from the graph before: Along the short-run Phillips curve, ______.
the expected inflation rate and the natural unemployment rate are constant.
Many economists believe that tinkering with the economy via discretionary fiscal policy is not effective due to:
the presence of time lags.
A stagflation can turn into a cost-push inflation process when _______.
the quantity of money persistently increases.
Along the long-run Phillips curve, _______.
the unemployment rate is constant at the natural unemployment rate
If the natural unemployment rate increases and the expected inflation rate remains constant, then ______.
the long-run Phillips curve shifts rightward and the short-run Phillips curve shifts rightward
News Clip: Economy Needs Treatment: "It's the debt, stupid! Only when the government sets out a credible business plan will confidence and hiring rebound." Question: A "credible business plan" for the government to adopt is a plan to ______.
decrease government expenditure.
Tax revenues ______ during a recession. Needs-tested spending ______ during an expansion.
decrease, decreases
The graph shows the aggregate demand curve, short-run aggregate supply curve, and long-run aggregate supply curve for this year. Draw a point at the price level and real GDP next year, if an inflation is correctly expected.
https://o.quizlet.com/fLwH7hanTURwf8MV2SmPog_b.png
Draw the short-run Phillips curve if the expected inflation rate is 5 percent a year. Label it SRPC1. Draw a point at the expected inflation rate and the natural unemployment rate. Label it 1. Draw the short-run Phillips curve if the expected inflation rate is 15 percent a year. Label it SRPC2. Draw a point at the expected inflation rate and the natural unemployment rate. Label it 2.
https://o.quizlet.com/jaiI4JqrURZ5y4FZkwzZ8Q_b.png
Draw the short-run Phillips curve if the natural unemployment rate is 4 percent and the expected inflation rate is 2 percent a year. Label it. Draw a point at the natural unemployment rate and the expected inflation rate.
https://o.quizlet.com/lwUTsa9HbgG8y.wvTlE4Pg_b.png
Many economists believe that increases in government debt are not necessarily problematic if the funds are used:
to build infrastructure
Choose the statement that is INCORRECT: A. The consensus is that the crowding out effect is strong enough to make the govt. expenditure multiplier less than 1. B. The govt. expenditure multiplier is the quantitative effect of a change in govt. expenditure on real GDP C. The tax multiplier is the quantitative effect of a change in taxes on real GDP D. The Demand-side effects of a tax cut are likely to be larger than an equivalent increase in govt. expenditure
D. The Demand-side effects of a tax cut are likely to be larger than an equivalent increase in govt. expenditure
Choose the statement that is INCORRECT: A. A tax on capital income lowers the quantity of saving and investment B. A tax on capital income creates a tax wedge C. A tax on capital income slows the growth rate of real GDP C. A tax on capital income slows the growth rate of real GDP D. The true tax rate on interest income is lower than that on labor income because of the way in which inflation and taxes on interest income interact
D. The true tax rate on interest income is lower than that on labor income because of the way in which inflation and taxes on interest income interact
According to the graph (click on link), if the solid line represents the GDP without policy and the dotted line includes policy, which side shows an inappropriate stabilization policy? https://kf1.amplifire.com/amp/Resource?path=7120a336-64e2-4bcc-a10f-827a1d22230e/9f/9fa0e93c-9b76-41ba-9519-9ed693491325.png&originalFileName=mac7_q5.png
Graph B, when Real GDP WITH policy is above Real GDP WITHOUT policy
Which of these are the largest sources of federal government revenues?
Personal income taxes and Social Security taxes
In 2008, spending on Social Security, Medicare and Medicaid was less than 10% of the GDP. By 2030 this amount is expected to be around 17% of GDP. One government option to solve this problem is to:
decrease benefits
The graph shows the aggregate demand curve, short-run aggregate supply curve, and long-run aggregate supply curve. Draw a curve that shows the effect of a rise in the price of oil. Label it. Draw a point at the new equilibrium in the economy.
https://o.quizlet.com/JhUmc64lCSE49ENx4MggTQ_b.png
What shift in the aggregate demand curve best represents the impact of a decrease in government spending through the multiplier process?
a continuous decreasing (shifting to the left) shift in the AD curve. Reference this link of a picture of this motion: https://kf1.amplifire.com/amp/Resource?path=7120a336-64e2-4bcc-a10f-827a1d22230e/9b/9b3a459f-b8c7-42c8-96d2-32e66a36fe9b.png&originalFileName=mac5_q18.png
The graph shows the demand for labor curve and supply of labor curve for an economy. Draw a point at the equilibrium real wage rate and equilibrium quantity of labor. Label it 1. Now the government imposes a tax on labor income. Draw a curve that shows the effect of this tax. Label it. Draw points at the new equilibrium quantity of labor to show: 1) the before-tax wage rate. Label it 2. 2) the after-tax wage rate. Label it 3.
https://o.quizlet.com/3FYjYpl1oClPTUNDDy1u3A_b.png
The graph shows an economy in a below full-employment equilibrium. To restore full employment, the government increases government expenditure by $0.5 trillion. Draw a curve that shows the effect if this increase in government expenditure is the only change in spending plans. Label it AD0+Upper DeltaE. The increase in government expenditure sets off a multiplier process. Draw a curve that shows the multiplier effect that returns the economy to full employment. Label it AD1. Draw a point at the long-run equilibrium.
https://o.quizlet.com/4N2cUkvJFe2ZszC40tJmBA_b.png
Draw a demand for loanable funds curve and a supply of loanable funds curve. Label them DLF0 and SLF0. Draw a point at the equilibrium real interest rate and quantity of loanable funds. Label it 1. Now the government imposes a tax on capital income. Draw a curve that shows the effect of this tax. Label it. Draw a point at the new equilibrium interest rate. Label it 2. Draw a point to show the new after-tax interest rate. Label it 3.
https://o.quizlet.com/H64qr701XZcrz-GTVzYeeQ_b.png
The graph shows the outlays and receipts curves for an economy. Actual real GDP is $13 trillion. Draw a vertical line that shows a value of potential GDP such that the economy has a cyclical deficit. Label the line.
https://o.quizlet.com/WSV1SOwTygeHfu9vrtvSgQ_b.png
The graph shows the aggregate demand curve, short-run aggregate supply curve, and the long-run aggregate supply curve. Draw a curve that shows the effect of an increase in the quantity of money. Label it C1. Draw a curve that shows the money wage rate response that returns the economy to potential GDP. Label it C2. Draw a curve that shows the effect of another increase in the quantity of money. Label it C3. Draw a curve that shows the money wage rate response that returns the economy to potential GDP. Label it C4. Draw a point at the new price level and real GDP when the economy returns to its new long-run equilibrium.
https://o.quizlet.com/kWgzSV7POFvaqCiiQX6xnQ_b.png
The graph shows the outlays and receipts curves for an economy. Draw a vertical line at a value of potential GDP at which a structural surplus exists. Label it 1. Draw a vertical line at a value of potential GDP at which a structural deficit exists. Label it 2.
https://o.quizlet.com/zjXPk0fA44lyMEZ3tVRpvg_b.png
The largest and fastest growing category of federal expenditures is __________.
transfer payments.
This question goes with the graph before: A movement ______ along the short-run Phillips curve occurs when there is an ______ increase in aggregate demand.
up; unexpected
The tax wedge is the gap between the before-tax and after-tax ______.
wage rates