ECO 201 - Chapter 33 Exam Questions and Answers Already Passed

ECO 201 - Chapter 33 Exam Questions and Answers Already Passed The federal government's purposeful manipulation of taxes and spending in order to "stimulate the economy" or "rein in inflation" is known as ____________ policy. - Answers fiscal Discretionary fiscal policy consists of deliberate changes in government spending and taxation designed to do which of the following? - Answers -Control inflation -Achieve full employment -Encourage economic growth An economy's potential output is also known as ___________. - Answers full-employment output What happens to the price level when aggregate demand (AD) declines? - Answers The price level remains the same. Policy changes that occur without congressional action are known as ______________ , passive, or automatic. - Answers nondiscretionary The manipulation of taxes and federal spending in order to stimulate the economy or reduce inflation is known as expansionary or contractionary ____________ policy. - Answers Fiscal Anything that increases the government's budget deficit (or reduces its budget surplus) during a recession and increases its budget surplus (or reduces its budget deficit) during an expansion without requiring explicit action by policymakers is called what? - Answers A built-in stabilizer __________________________________ consists of deliberate changes in government spending and taxation designed to achieve full employment, control inflation, and encourage economic growth. - Answers Discretionary fiscal policy Evaluating the status of fiscal policy requires adjusting deficits and surpluses to eliminate automatic changes in ____ revenues. - Answers tax An economy's ______ ________ is also known as full-employment output. - Answers potential output What do economists use to estimate the annual deficit or surplus that would occur under existing tax rates and government spending levels if the economy were to operate at full employment? - Answers Cyclically adjusted budget True or false: The price level can remain stuck at its old level even when aggregate demand declines. - Answers True How do cyclically adjusted budget deficits compare in size to actual budget deficits? - Answers They are smaller Which of the following are used to describe policy changes that occur without congressional action? - Answers -Nondiscretionary -Automatic -Passive The economy strengthened and real _________ grew between 2003 and 2007. - Answers GDP _ _____ __ _________ is anything that increases the government's budget deficit (or reduces its