Macro Exam 3-Ch10

Rising productivity will increase economic growth and raise the average standard of living, shifting the _____ curve to the _____.

long-run aggregate supply; right

Automatic stabilizers are designed so that as income falls:

spending does not fall as much as income.

A supply-side economist is advocating reducing income tax rates. She is probably assuming that the economy is at point _____ in the graph.

the top point (d)

Which of the following is an example of contractionary fiscal policy?

reducing military spending

One strength of the use of discretionary fiscal policy is the timing lags.

False

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.