ECON 1010 Study Guide - Final Guide: Government Budget Balance, Real Wages, Aggregate Supply

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greenlion748

10 Jan 2013

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So fiscal policy is budgets of the government activity that achieve macroeconic policy objectives. The budget balance formula is budget balance revenues outlays. Revenues have 4 sources: personal income tax, corporate tax, indirect, investment income. Outlays have 3 sources: transfer payment, debt interest , goods and services. Government debt (total amount of government borrowing) = past deficits past surplus. Income tax changes full employment and potential gdp. Higher income taxes decrease incentives to work by creating the tax wedge. Tax wedge: the gap b. w before tax wage rate after tax-wage rate. The supply of labour decreases b/c the tax decreases the after-tax wage rate. In this case the after-tax rate falls while the before-tax rate increases. Taxes on consumption increase the wedge by increasing consumption taxes, lowering rl wage rate and labour supply. This decreases the supply of loanable funds and investment and saving decrease.

Related Questions

Fiscal policy is carried out primarily by

A) the Federal government.

B) state and local governments working together.

C) state governments alone.

D) local governments alone.

Fiscal policy refers to the:

A) manipulation of government spending and taxes to stabilize domestic output, employment, and the price level.

B) manipulation of government spending and taxes to achieve greater equality in the distribution of income.

C) altering the interest rate to change aggregate demand.

D) fact that equal increases in government spending and taxation will be contractionary.

Expansionary fiscal policy is so named because it:

A) involves an expansion of the nation's money supply.

B) necessarily expands the size of government.

C) is aimed at achieving greater price stability.

D) is designed to expand real GDP.

An appropriate fiscal policy for severe demand-pull inflation is:

A) an increase in government spending.

B) depreciation of the dollar.

C) a reduction in interest rates.

D) a tax rate increase.

29. The amount by which government expenditures exceed revenues during a particular year is the:

A) public debt.

B) budget deficit.

C) full-employment.

D) GDP gap.

30. If actual GDP is greater than potential GDP, we have

A) a negative GDP gap

B) a positive GDP gap

C) minimum GDP gap

D) maximum GDP gap

31. Money functions as:

A) a store of value.

B) a unit of account.

C) a medium of exchange

D) all of the choices

pinkhedgehog911

5 Multiple choice questions... please answer all of them.

15.

The accumulation of years of spending more money than is collected in revenues over several years creates a budget (5 points)

	debt
	deficit
	surplus
	reversal

16.

How does the U.S. government promote economic growth? (5 points)

	By decreasing taxes and decreasing spending
	By decreasing taxes and increasing spending
	By increasing taxes and decreasing spending
	By increasing taxes and increasing spending

17.

The country of Lilliput has low unemployment and high consumer spending, and small businesses are thriving. However, prices are starting to rise throughout the economy. What should Lilliput's government do to prevent inflation from happening? (5 points)

	Lower the income tax, which gives citizens less money to spend, and buy services from civilian-owned businesses, which creates more jobs.
	Lower the income tax, which gives citizens more money to spend, and buy more services from civilian-owned businesses, which creates more jobs.
	Raise the income tax, which gives citizens less money to spend, and stop buying services from civilian-owned businesses, which eliminates jobs.
	Raise the income tax, which gives citizens less money to spend, and buy more services from civilian-owned businesses, which creates more jobs.

18.

The government increases taxes. What might be a reason for this change in fiscal policy? (5 points)

	A deficit due to improving nationwide public transportation
	A deficit due to more monies flowing in from investors
	A surplus due to greater amounts of income from exports
	A surplus due to more government spending on building roads

19.

Which of these is required to balance the budget for the year? (5 points)

	Revenue equal to spending
	Revenue greater than spending
	Revenue less than spending
	No national debt

What is fiscal policy? What is debt management policy? Explain howfiscal and debt management policy might be used to help fightinflation and unemployment. What causes a budget deficit and abudget surplus?
Describe the possible impacts of government borrowing upon thefinancial system and the economy.
What are the principal sources of revenue for state and localgovernments today? Where do they spend the bulk of their incomingfunds?
Which type of bond is the best to own and what type of provision isthe most important to have from the following list? Call privilege,subordinated debenture, income bond, sinking fund, mortgage bond,industrial development bond (IDB), debenture, and Equipment TrustCertificate.

ochrehippopotamus600

ECON 1010 Study Guide - Final Guide: Government Budget Balance, Real Wages, Aggregate Supply

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