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Which of the following are tools of fiscal policy to positively stimulate the economy?

- Increases in government spending - Tax reductions

Which of the following automatically increase during a recession?

- food stamps - unemployment benefits - welfare

The tools of monetary policy include which of the following

- open-market operations - discount-rate change - reserve requirements

What automatically happens to tax receipts when the economy declines?

They decline

True or false: The U.S. economic history is punctuated by periods of recession, high unemployment, inflation, and recurring concern for the distribution of income and mix of output.

True

Regarding policymaking, Keynesian economists focus on _____, whereas supply-sider economists focus on _____.

aggregate demand; aggregate supply

Automatic stabilizers are

automatic changes in taxes or spending

When the economy slows, tax receipts ______________ .

decrease

If an economy is experiencing inflation the Keynesians would argue that the appropriate fiscal policy is:

decreasing spending raising taxes

Discretionary fiscal policy refers to

deliberate changes in tax or spending legislation

Discretionary fiscal policy refers to _______ changes in tax or spending legislation whereas automatic stabilizers are _______ changes in taxes or spending.

deliberate; automatic

Once a macro problem is identified and measured, there may be problem related to the type of fiscal or monetary policy that should be used. This is an example of the

design problem.

Once a macro problem is identified and measured, there may be problem related to the type of fiscal or monetary policy that should be used. This is an example of the ____________________

design problem.

The primary obstacles to policy success are goal conflicts, measurement problems,

design problems, and implementation problems

Adjustments in economic policy designed to counteract small change in economic outcomes is referred to as ________________ .

fine-tuning

Continuous responses to changing economic conditions is known as

fine-tuning

A Keynesian economist would use ________ policy to counter inflation.

fiscal

The Federal government's purposeful manipulation of taxes and spending in order to stimulate the economy or reduce inflation is known as:

fiscal policy

The multiplier effect causes the aggregate demand curve to shift by an amount ______ an initial change in government spending.

greater than

Measuring employment changes, output changes, price changes, and other macro outcomes

happens slowly.

A recession can cause government spending to automatically __________________ .

increase

A recession can cause government spending to automatically _____________________ .

increase

During a recession, one way to increase aggregate demand is to __________________ government spending.

increase

The goal conflict that might arise when implementing economic policy is often seen in the short-run trade-off between unemployment and

inflation

The goal conflict that might arise when implementing economic policy is often seen in the short-run trade-off between unemployment and _______________________

inflation

The President and the Congress know that if they don't take action against inflation -- by raising taxes or cutting government spending -- the Federal Reserve will use _______ to restrain aggregate demand.

monetary policy

Successful macro policy requires timely and accurate data on the economy. Yet, as one recent example, the recession of 2008-2009 took _______ before the onset of the recession was officially recognized.

one year

There is a delay between the time fiscal action is taken and the time that action affects:

output, employment, or the price level

The enactment of discretionary fiscal policy may be slowed or ineffective because it is conducted in a ____________________ arena.

political

When an economy is experiencing inflation, Keynesians would argue that an acceptable fiscal policy option would be:

raising tax rates

The President and the Congress know that if they don't take action against inflation by _______, the Federal Reserve will use monetary policy to restrain aggregate demand.

raising taxes or cutting government spending

Prices and wages rising in the auto industry while unemployed workers are abundant in the housing industry is an example of

structural unemployment

Unemployment caused by a mismatch between the skills of job seekers and the requirements for jobs is referred to as

structural unemployment

Continuous responses to changing economic conditions is known as ____________ .

supply-side policy

The use of tax rates, regulation, and other mechanisms to increase ability and willingness to produce goods and services is referred to as

supply-side policy

The theory that stresses the manipulation of aggregate supply to influence inflation and unemployment is known as ______ economics. The theory that focuses on the manipulation of the aggregate demand curve is _______ economics.

supply-side; Keynesian

Fiscal policy is deliberate changes in _______ legislation.

tax and spending

Supply-side policy is the use of _______ in order to influence macroeconomic outcomes.

tax rates, regulation, and mechanisms such as education and training

The problem of deciding the appropriate policy after an issue is identified and measured is known as:

the design problem

Aggregate demand increases by an amount greater than an initial change in government spending. This is caused by:

the multiplier effect

The idea that even if the right policy is formulated to solve an emerging economic problem, there's no assurance that it will take effect at the right time is related to the issue of

time lags.

The goal conflict that might arise when implementing economic policy is often seen in the short-run trade-off between _________________ and inflation.

unemployment

Which of the following characterize the track record of the U.S. economy?

The economy has grown over time. Unemployment has sometimes been high. There have been periods of recession.

True or false: Economic considerations always outweigh political considerations in the formulation of fiscal policy.

False

True or false: Measuring employment changes, output changes, price changes, and other macro outcomes happens instantly.

False

_______ is the use of government taxes and spending to alter macroeconomic outcomes.

Fiscal Policy

_______ is deliberate changes in tax and spending legislation.

Fiscal policy

Which of the following are the four primary obstacles to policy success?

Goal conflicts Design problems Measurement problems Implementation problems

The four obstacles to policy success are:

Implementation problems Design problems Measurement problems Goal conflicts

_______ is the use of money and credit controls to influence macroeconomic outcomes.

Monetary policy

The processes of data collection, assembly, and presentation take time. How long did it take for the recession of 2008-2009 to be officially recognized?

One year

considerations often outweigh economic consideration in the formulation of fiscal policy.

Political, Reelection, Congressional, Government, Politics, or Congress

During an election period, a politician may favor large tax cuts in order to quickly stimulate the economy to increase reelection hopes. This is an example of what?

Politicians making fiscal policy decisions that may not be economically appropriate