Question :
261.Real GDP equals $400 billion, the government collects 25% of : 2032674
261.Real GDP equals $400 billion, the government collects 25% of any increase in real GDP in the form of taxes, and the marginal propensity to consume is 0.8. If the government decreases spending by $40 billion, real GDP will decrease by:
A)$40 billion.
B)$80 billion.
C)$100 billion.
D)$200 billion.
262.Real GDP equals $400 billion, the government collects 25% of any increase in real GDP in the form of taxes, and the marginal propensity to consume is 0.8. If potential output equals $250 billion, the government could close the _____ gap by decreasing government spending by _____.
A)recessionary; $30 billion
B)recessionary; $150 billion
C)inflationary; $30 billion
D)inflationary; $60 billion
263.Fiscal policy is the use of taxes, government transfers, or government purchases to shift the aggregate demand curve.
A)True
B)False
264.Medicare covers much of the cost of medical care for Americans with low incomes.
A)True
B)False
265.The 2009 U.S. stimulus was an expansionary fiscal policy that increased aggregate demand.
A)True
B)False
266.When faced with a recessionary gap, the government can increase taxes and cut spending to close it.
A)True
B)False
267.Expansionary fiscal policy pushes the aggregate demand curve to the right.
A)True
B)False
268.Increased government transfers constitute contractionary fiscal policy.
A)True
B)False
269.Lyndon Johnson's tax surcharge was an expansionary fiscal policy that increased aggregate demand.
A)True
B)False
270.One of the lags associated with fiscal policy is the time it takes to recognize that the economy has developed a recessionary or inflationary gap.
A)True
B)False
