Aggregate Expenditure, Equilibrium Output, Fiscal Policy

During recessions, government spending usually

• decreases because unemployment payments decrease.

• increases because unemployment payments increase.

• decrease because unemployment payments increase.

• increases because unemployment payments decrease.

Disposable income

• increases when net taxes increase.

• increases when income increases.

• decreases when saving increases.

• increases when saving decreases.

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

• $1,350.

• $750.

• $650.

• -$350.

When the government sector is included in the income-expenditure model, the equation for aggregate income is

• Y = C + S - T.

• Y = C + I.

• Y = C + I + G.

• Y = C + S + I.

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

• net revenue.

• net taxes.

• the government budget deficit or surplus.

• the government debt.

In 2016, the city of Canfield collected $500,000 in taxes and spent $450,000. In 2016, 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.

In 2016, the city of Miketown collected $250,000 in taxes and spent $350,000. In 2016, the city of Miketown had a

• budget surplus of $100,000.

• budget surplus of 57%.

• budget deficit of $100,000.

• budget deficit of $200,000.

After government and taxes is added to the income-expenditure model, the formula for the aggregate consumption function is

• C = a - b(Y - T).

• C = a - b(T - Y).

• C = a + b(Y + T).

• C = a + b(Y - T).

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 output is less than planned aggregate expenditure, there will be

• an unplanned increase in inventories.

• an unplanned decrease in inventories.

• no change in inventories.

• a planned increase in inventories.