Macro Exam 3

When changes in taxes and government purchases occur in the economy without explicit action by Congress, such changes are referred to as... (ch.8)

automatic stabilizers

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)... (ch.8)

recognition lag

Due to automatic stabilizers, when the nation's total income rises, government transfer payments... (ch.8)

decrease and tax revenues increase

Which of the following is a an example of built-in stability? As real GDP decreases... (ch.8)

income tax revenues and transfer payments increase

One timing problem in using fiscal policy to counter a recession is the "recognition lag" that occurs between the... (ch.8)

start of the recession and the time it takes to recognize the recession has started

If the economy falls into a recession, automatic stabilizers will cause... (ch.8)

tax receipts to fall and gov't to rise

When government purchases are increased, the amount of the increase in aggregate demand primarily depends on... (ch.8)

the size of the multiplier/ the size of the marginal propensity to consume

Using fiscal policy to stabilize the economy is difficult because... (ch.8)

there are time lags involved in the use of fiscal policy