Fiscal Policy
Which of the following are considered tools of fiscal policy?
Changes in government spending; changes in taxes
Is the application of fiscal policy to decrease aggregate demand; Involves decreasing government purchases and/or increasing taxes
Contractionary fiscal policy
Is the application of fiscal policy to decrease aggregate demand; Involves decreasing government purchases and/or increasing taxes.
Contractionary fiscal policy
Changes in government purchases and/or taxes designed to achieve full employment and low inflation is called
Fiscal policy
The concept that an additional dollar of expenditures will result in the creation of more than one dollar's worth of real GDP
Multiplier effect
A decline in real output for at least two consecutive quarters is called
a recession
A phase of the business cycle characterized by increasing real GDP, income, and employment is called
an expansion
The short-term fluctuations experienced in the economy due to changes in level of economic activity refers to the _________ cycle
business
This policy involves decreasing government purchases and/or increasing taxes
contractionary fiscal policy
When taxes increase, AD:
decreases
A decrease in expenditures causes the aggregate __________ curve to shift tot he left.
demand
The level of real GDP produced in an economy when it is operating at the natural rate of unemployment is called full __________ GDP
employment
The application of fiscal policy to increase aggregate demand is called ________ fiscal policy
expansionary
The application of fiscal policy to increase aggregate demand is called ___________ fiscal policy
expansionary
Involves increasing government purchases and/or decreasing taxes
expansionary policy
Full employment and low inflation can fostered using both ________ and __________ fiscal
expansionary; contractionary
An increase in transfer payments has an effect on the economy similar to
explicitly increasing government purchases, which is the active fiscal policy prescriptions a country in recession
Expansionary __________ policy stimulates aggregate demand and expands output by lowering taxes, increasing government purchases, or some combination of the two
fiscal
The level of real GDP produced in an economy when it is operating at the natural rate of unemployment is called
full-employment GDP
Because the U.S. Federal income tax is a progressive tax, as income __________ (increases/decreases) average federal tax rates increases
increases
Expansionary fiscal policy
involves increasing government purchases and/or decreasing taxes; Is the application of fiscal policy to increase aggregate demand
The condition Y=Yfull employment refers to _______- ___________ equilibrium
long run
The concept that an additional dollar of expenditures will result in the creation of more than one dollar's worth of real GDP is called the __________ effect
multiplier
Exports minus imports gives us _______ exdports
net
Increasing government spending on national defense to replace an outdated naval fleet is
not referred to as fiscal policy
Consumption (C) + Gross Investment (I) + Government Purchases (G) + Net Exports (NX) characterizes
real GDP expenditures
The condition AD=AS determines the _____-______ equilibrium
short run
One of the most frequently used tools of fiscal policy is changing
taxes
