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Fiscal Policy, Deficits, & Debt. Terms in this set (25)Fiscal policy refers to manipulation of government spending and taxes to stabilize domestic output, employment, and the price level. When the federal government uses taxation and spending actions to stimulate the economy, it is conducting: fiscal policy. If the government wishes to increase the level of real GDP, it might reduce: Taxes Which combination of fiscal policy would most likely be offsetting? Increase in taxes and government spending. Refer to the above diagram. The economy is at equilibrium at point B. What fiscal policy would increase real GDP? Increase aggregate demand from AD2 to AD3 by decreasing taxes. Countercyclical discretionary fiscal policy calls for: deficits during recessions and surpluses during periods of demand-pull inflation. When government tax revenues change automatically and in a countercyclical direction over the course of the business cycle, this is an example of: built-in stability. A federal budget deficit exists when: Federal government spending exceeds tax revenues The crowding-out effect suggests that increases in government spending may raise the interest rate and thereby reduce private investment. The public debt is held as: Treasury bills, Treasury notes, Treasury bonds, and U.S. savings bonds. The time that elapses between the beginning of a recession or an inflationary episode an dthe identification of the macroeconomic problem is referred to as a (n): recognition lag. Which of the following are contractionary fiscal policies? Increased taxation and decreased government spending. If the Congress passes legislation to increase government spending to counter the effects of a recession, then this would be an example of a (n): expansionary fiscal policy. The combination of fiscal policies that would reinforce each other and be most expansionary would be a (n): increase in government spending and a decrease in taxes. A contractionary fiscal policy can be illustrated by a (n): decrease in aggregate demand. The economy starts out with a balanced Federal budget. If the government then implements expansionary fiscal policy, then there will be a budget deficit. Which of the following best describes the built-in stabilizers as they function in the United States? Personal and corporate income tax collections automatically rise and transfers and subsidies automatically decline as GDP rises. The public debt for the economy is 460 billion Approximately what percentage of the U.S. public debt is held by foreign individuals and institutions (2015)? 34 % The public debt is the amount of money that the federal government owes to holders of U.S. securities. 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. Refer to the diagram, in which T is tax revenues and G is government expenditures. All figures are in billions. The budget will entail a deficit at any level of GDP below $400. Other things equal, an increase of corporate bonds from $140 billion to $150 billion in the economy would not change the size of the public debt. Refer to the diagram, in which T is tax revenues and G is government expenditures. All figures are in billions. In this economy, tax revenues vary directly with GDP, but government spending is independent of GDP. To say that "the U.S. public debt is mostly held internally" is to say that the bulk of the public debt is owned by U.S. citizens and institutions. Students also viewedRealidades 2: Chapter 5B54 terms senorapescadora Capítulo 1 Set 135 terms SenoraSteeleTeacher Chapter 159 terms agisangkekana0 AP PSYCH CH2 VOCAB AND TERMS90 terms michaelhx Sets found in the same folder2301 Final Chapters 6-921 terms Whitney_50 2301 Final Chapters 12-1316 terms Whitney_50 ECON 2301 Exam 1 Victoria College Li60 terms justin_mccarrell8 2301 Final Chapters 14-1614 terms Whitney_50 Other sets by this creatorFitting, Valves, Pumps, Tools14 terms Whitney_50 Ch. 5 - Compressors23 terms Whitney_50 Ch. 4 - Pumps23 terms Whitney_50 Ch. 7 Symbols and Diagrams Quiz F2013 terms Whitney_50 Verified questions
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A budget deficit can lead to higher levels of borrowing, higher interest payments, and low reinvestment, which will result in lower revenue during the following year.
How does the government fund a deficit in their budget quizlet?How does the federal government finance a budget deficit? It borrows funds by selling Treasury bonds. In the current year, a nation's government spending equals $1.5 trillion and its revenues are $1.9 trillion.
When the government runs a budget deficit What is most likely to happen quizlet?Terms in this set (20) If government spending is greater than government revenues, then: the government is running a budget deficit. If the federal government is running a budget deficit, it will most likely borrow to fund the current overspending.
What happens when the government has a budget deficit or surplus?A budget surplus is when income exceeds expenditures. When a government runs a surplus, they have additional money that can be reinvested or used to pay off debts. A deficit is the opposite of a surplus. When spending exceeds revenues, the government must borrow money in order to fund spending.
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What does the United States government do when the budget is in deficit quizlet?
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