Chapter 12 Flashcards Preview

Macro Economics > Chapter 12 > Flashcards

Flashcards in Chapter 12 Deck (25):
1

There is a recessionary gap win

The equilibrium GDP smaller than full employment GDP

2

Over the last four decades we have had

Deficits and surpluses

3

Which statement is true about automatic stabilizers

They have help smooth out the business cycle

4

Statement 1 the federal budget deficit more than doubled between 1987 in 1992.
Statement 2 high federal budget deficits tend to push real interest rates.

Both are true

5

When there is a recession the biggest percentage decline would be in

Corporate after-tax profits

6

Each of the following is an example of discretionary fiscal policy except

The unemployment insurance program

7

If the equilibrium GDP is 1 trillion greater than full employment GDP and there is an inflationary gap of 250 billion the multiplier is

4

8

The national debt past the 2 trillion mark in what year

1986

9

True false-- over 50% of the outstanding public debt is owned by foreigners

True

10

In 1930 John Maynard Keynes said that our main economic problem was

A week aggregate demand

11

true or false---because of the national debt grows each year, we have to pay more and more interest on the debt; because interest payment keep rising, or deficits keep growing, further pushing up the debt.

True

12

Right now our national debt is

Over 8 trillion

13

Between the years 1989 in 1992 are federal budget deficit

Rose substantially

14

In the mid-1990s the federal budget deficit

Rose slightly

15

Large budget deficits tend to

Raise interest rates

16

Interest rates in the United States would have been higher in recent years had it not been for

The inflow of funds from foreigners

17

When government expenditures in a given year exceed tax receipts there exists

A budget deficit

18

And illustration of the term automatic stabilizer is provided by

The tendency of tax collections to fall as the economy moves into a recession

19

It's full employment GDP is 1 trillion and equilibrium GDP is 7 trillion

There is definitely a recession gap

20

The reason the multiplier is greater than one is that

Income is re-spent

21

John Maynard Keynes Believe that

We could spend our way out of the great depression

22

When government expenditures in a given year less than tax receipts there exists

A budget surplus

23

Supposed to deficit in the year 2010 is 500 billion in the year 2011 it falls did 200 billion if the national debt is the at the beginning of year 2010 is 10 trillion how much will it be at the end of the year 2011?

10.7 trillion

24

Automatic stabilizers do what

For probably insufficient to completely offset strong recessionary pressures

25

Fiscal policy deals with each of the following except

The money supply