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Fiscal Policy

Explore fiscal policy in government budgets, national debt, stimulus measures, and economic impacts. Learn about discretionary policy, full employment, and supply-side effects on GDP.

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Fiscal Policy

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  1. 32 Fiscal Policy CLICKER QUESTIONS

  2. Checkpoint 32.3 Checkpoint 32.1 Checkpoint 32.2 Question 8 Question 4 Question 1 Question 9 Question 5 Question 2 Question 6 Question 10 Question 3 Question 7

  3. CHECKPOINT 32.1 Question 1 When government outlays exceed tax revenues, the government ______. • has a budget with a positive balance • has a budget deficit • has a budget surplus • has a budget with a negative debt • must cut its expenditure because outlays cannot exceed tax revenues

  4. CHECKPOINT 32.1 Question 2 National debt decreases in a given year when the government of the country has a ______. • budget deficit • balanced budget • budget supplement • budget surplus • zero budget balance

  5. CHECKPOINT 32.1 Question 3 In the United States, _______ proposes the budget, and _____ signs the budget act into law. • Congress; Congress • the House of Representatives; the president • the Senate; the Treasury Secretary • the president; Congress • the Treasury Secretary; Congress

  6. CHECKPOINT 32.2 Question 4 The ____ view says that fiscal stimulus has a multiplier effect that makes it a ____ tool to fight a deep recession. • mainstream; useful • mainstream; weak • Keynesian; useful • Keynesian; useless • None of the above answers is correct.

  7. CHECKPOINT 32.2 Question 5 An example of fiscal stimulus policy is ______. • the automatic increase in needs-tested spending in a recession • induced taxes • a decrease government expenditure on goods and services • a decrease in needs-tested spending • a cut in taxes

  8. CHECKPOINT 32.2 Question 6 If the economy is at an above full-employment equilibrium, ____ gap exists, and discretionary fiscal policy that ____ will return real GDP to potential GDP. • an inflationary; increases aggregate demand • an inflationary; decreases aggregate demand • a recessionary; increases aggregate supply • a recessionary; decreases aggregate supply • a recessionary; decreases aggregate demand

  9. CHECKPOINT 32.2 Question 7 Discretionary fiscal policy is hampered by _____. • induced taxes and automatic stabilizers • law-making time lags, estimation of potential GDP, and economic forecasting • economic forecasting, law-making time lags, and induced taxes • automatic stabilizers, law-making time lags, and potential GDP estimation • automatic stabilizers and induced taxes

  10. CHECKPOINT 32.3 Question 8 Full employment is determined in the market for ____ and that quantity, along with the ____, determines potential GDP. • loanable funds; production function • goods and services; labor market • labor; tax rate • labor; production function • labor; tax wedge

  11. CHECKPOINT 32.3 Question 9 The supply-side effects of an income tax cut ____ potential GDP and ____ aggregate supply. • increase; increase • increase; decrease • decrease; increase • decrease; decrease • increase; do not change

  12. CHECKPOINT 32.3 Question 10 If fiscal stimulus creates a large budget ____, then in the long run, economic growth will ____. • surplus; increase • surplus; decrease • deficit; increase • deficit; decrease • balance; not change

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