1102E - CHAPTER 8 - FISCAL POLICY

If the government decreases Taxes and increases Government Spending (G), what type of policy is it?

• It’s an Expansionary Fiscal policy
• It’s an Expansionary Monetary policy
• It’s a Contractionary Fiscal policy
• It’s a Contractionary Monetary policy

______ is the use of government expenditures and taxes to promote full employment, stable prices, and economic growth.

• Monetary policy
• Stabilization policy
• Incomes policy
• Fiscal policy

Bill's income is $1,000 and his net taxes are $350. His disposable income is:

• $10,350
• $750
• $650
• - $350

The difference between what a government spends and what it collects in taxes in a year is:

• personal income tax
• the government budget deficit or surplus
• the government debt
• net revenue

In 2020, the city of Canfield collected $500,000 in taxes and spent $450,000. In 2020, the city of Canfield had a

• budget surplus of $450,000.
• budget surplus of $50,000.
• budget deficit of $50,000.
• budget surplus of $5,000.

The aggregate consumption function is C = 100 + 0.6Yd. If income is $1,000 and net taxes are $300, consumption equals:

• 800
• 700
• 580
• 520

If the government wants to increase employment, government purchases should be ________ and/or taxes should be ________.

• increased; increased
• increased; decreased
• decreased; increased
• decreased; decreased

What is the largest source of revenue in the government's budget?

• social insurance
• indirect business taxes
• corporate taxes
• personal taxes

The total amount owed by the government to the public is the

• public debt
• net tax revenue
• public budget deficit
• fiscal drag

Which of the following is a correct sequence of events during a recession?

• Unemployment falls, income falls, tax revenue falls, unemployment benefits rise, and the budget deficit rises.
• Unemployment rises, income falls, tax revenue falls, unemployment benefits rise, and the budget deficit rises.
• Unemployment rises, income falls, tax revenue rises, unemployment benefits fall, and the budget deficit falls.
• Unemployment rises, income rises, tax revenue rises, unemployment benefits rise, and the budget deficit rises.