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