Chapter 10
When the MPC is .75, a decrease in net taxes of $100 billion will increase the equilibrium level of real GDP by
$300 billion
If the marginal propensity to consume is 3/4, the simple multiplier is
4
If government spending increases, shifting aggregate demand from _____ to _____, aggregate output will increase from _____ to _____
AD0;Ad1:Qo;Qf
Rising productivity will increase economic growth and raise the average standard of living, shifting the _____ curve to the _____.
long-run aggregate supply; right
Which of the following is an example of contractionary fiscal policy?
reducing military spending
Automatic stabilizers are designed so that as income falls:
spending does not fall as much as income
If an expansionary policy pushes output beyond the full employment level of GDP:
the short-run aggregate supply curve will shift to the left.
_____ is the amount by which annual tax revenues exceed government expenditures.
The budget surplus
If a government collects $1,400 in tax revenue and spends $1,600, it has:
a deficit of $200
The best discretionary fiscal policy option is:
expansionary fiscal policy that leads to full employment.
One strength of the use of discretionary fiscal policy is the timing lags.
false