ECON 131 HW 8

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At the beginning 2010, the government of Norway had no debt and held $180 billion dollars in its sovereign fund. To stimulate its economy during 2011, Norway's government plans to spend $35 billion more than it will collect in tax revenue and in 2012, its spending will exceed tax revenues by $25 billion. What will the total government debt equal at the end of 2012?

$0

If the government for the state of Washington collects $65.8 billion in tax revenues in 2013 and total spending in the same year is $74.8 billion, the result will be:

a budget deficit.

The government can use _____________ in the form of ______________ to increase the level of aggregate demand in the economy.

an expansionary fiscal policy; an increase in government spending

If an economy moves into a recession, causing that country to produce less than potential GDP, then:

automatic stabilizers will cause tax revenue to decrease and government spending to increase.

A __________________ policy will cause a greater share of income to be collected from those with high incomes than from those with lower incomes.

progressive tax

The time lag for monetary policy is typically ___________ the time lag for fiscal policy.

shorter than


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