ch 33 Econ

a federal budget deficit exists when

Federal government spending exceeds tax revenues

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the crowding out effect of expansionary fiscal policy suggests that

increases in government spending financed through borrowing will increase the interest rate and thereby reduce investment.

The time that elapses between the beginning of a recession or an inflationary episode and the identification of the macroeconomic problem is referred to as a(n)

recognition lag

built in stability means that

with given tax rates and expenditures policies, a rise in domestic income will reduce a budget deficit or produce a budget surplus while a decline in income will result in a deficit or a lower budget surplus.

the social security program is designed to pay

Current retirees using funds from current contributions

which of the following nations had the highest public sector debt as a percentage of GDP in 2015?

Japan

which of the following best describes the idea of a political business cycle

Politicians will use fiscal policy to cause output, real incomes, and employment to be rising prior to elections.

Fiscal policy refers to the

deliberate changes in government spending and taxes to stabilize domestic output, employment, and the price level.

contractionary fiscal policy is named so because

it is aimed at reducing aggregate demand and thus achieving price stability

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an appropriate fiscal policy for severe demand pull inflation is

tax rate increase