Macro, chapter 13
If the federal government's tax revenues are greater than its outlays, then the federal budget has a
surplus.
A budget surplus occurs when government
tax revenues exceeds outlays.
In 2013, the U.S. government budget had a deficit. By definition, then,
tax revenues were less than government outlays.
A government incurs a budget deficit when
taxes are less than government outlays.
A discretionary fiscal policy is a fiscal policy that
requires action by the Congress.
A country has been in existence for only two years. In the first year, tax revenues were $1.0 million and outlays were $1.5 million. In the second year, tax revenues were $1.5 million and outlays were $2.0 million. At the end of the second year, the total government debt was ________.
$1 million
Suppose that real GDP equals potential GDP, but the government believes that the economy is in a below full-employment equilibrium. As a result, the government increases its expenditure on goods and services. In response to the government's fiscal policy,
aggregate demand will increase.
Suppose the economy is at a short-run equilibrium with real GDP greater than potential GDP. Which of the following fiscal policies would decrease real GDP and the price level?
an increase in taxes.
A fall in income that results in a decrease in tax revenues is an example of ________.
automatic fiscal policy
If the government has a balanced budget, the total amount of government debt is
constant.
Suppose real GDP exceeds potential real GDP. If the government decreases its expenditures on goods and services, then real GDP ________ and the price level ________.
decreases; falls
If the government wants to engage in fiscal policy to increase real GDP, it could
increase government expenditure in order to increase aggregate demand.
During an expansion, tax revenues ________ and government transfer payments ________.
increase; decrease
A government that currently has a budget deficit can balance its budget by ________.
increasing tax revenues by more than it increases outlays
If the government runs a deficit, the total amount of government debt is
increasing.