Chapter 15 Fiscal Policy

| November 9, 2018

65)
The federal budget has three components. Name them.

66)
Describe the three broad categories of the U.S. budget.

67)
What is the federal government’s largest source of revenue?

68)
Explain how a change in tax rates influences aggregate demand and aggregate
supply.

69)
Explain how an increased federal budget deficit resulting from a recession can
actually help stabilize an economy.

70)
Describe the relationship illustrated by the Laffer curve.

71)
Why do most economists believe that the Laffer argument does not apply to
broad-based taxes?

72)
Explain the differences between a federal budget deficit, a federal budget
surplus, and a balanced federal budget.

73)
Explain how automatic stabilizers work.

15.3 Fiscal Policy in U.S. History

1)
In the United States during the 1930s, politicians
A)
relied on government spending and taxation to pull the economy out of the
depression.
B)
did not believe in using government spending and taxation because they feared
the consequences of budget deficits.
C)
knew that the depression would eventually subside because of automatic
stabilizers.
D)
deliberately relied on government spending and taxation even though they knew
the depression would continue.

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