Macroeconomics Extra Credit Chapter 10 Quiz

________ policy involves adjusting government spending and tax policies to move the economy toward full employment, economic growth, and low inflation.

Discretionary fiscal

The largest category of federal government spending in 2012 was:

Social Security.

_____ are securities with a maturity period of a year or less that sell at a discount.

Treasury bills

The solution to simultaneous deflation and unemployment is to shift the:

aggregate demand curve to the right.

Suppose a government finances its expansionary fiscal policy by borrowing from the public. Joseph is concerned that this will increase the demand for loanable funds, drive up interest rates, and leave less loanable money available for consumers and businesses. Joseph is concerned about the:

crowding-out effect.

The concept of generational imbalance is designed to:

estimate how much of a fiscal imbalance is shifted to future generations.

Expansionary fiscal policy is typically used to __________ aggregate demand in order to ____________.

increase; escape a recession

The $787 billion stimulus package passed in the United States in 2009 focused more on spending than on taxes partly because:

increased spending leads to a larger increase in GDP than the same reduction in taxes.

If interest rates rise, the burden of a nation's public debt _____ and the probability of a default _____.

rises; rises

Automatic stabilizers are designed so that as income falls:

spending does not fall as much as income.

When the government's debt is monetized:

the Federal Reserve buys bonds from the government.

One issue regarding the national debt is that:

the proportion of the debt held by foreigners is rising

Which of the following is NOT an explicit short-run goal of discretionary fiscal policy?

zero unemployment