1 When government outlays are greaterthan revenues, the national debt , and when the government's outlays aresmallerthanrevenues,the national debt GROWS SHRINKS SHRINKS GROWS GROWS DOES NOT CHANGE DOES NOT CHANGE SHRINK 2 A progressive tax is one that takes a percentage of your income as your income LARGER DECLINES SMALLER RISES FLAT DECLINES SMALLER FALLS 3 During expansions, automatic stabilizers are designed to moderate the increase in spending Which of the following best describes automatic fiscal policy during an expansion GOVERNMENT OUTLAYS AND TAX REVENUES FALL GOVERNMENT OUTLAYS RISE AND TAX REVENUES FALL GOVERNMENT OUTLAYS AND TAX REVENUES RISE GOVERNMENT OUTLAYS FALL AND TAX REVENUES RISE 4 Which of the following is an appropriate fiscalpolicy response to a positive GDP gap Raise real interest rates Raise income tax rates Increase government spending Lower real interest rates 5 Our macroeconomic model suggests that after an increase in aggregate demand like that of the 2007, the economy will self correct and return to a position where the GDP gap is zero If this is correct, why should the government ever intervene with fiscal policy This is part of the government's mission statement as given in the constitution People do not trust the theory behind the model Fiscal policy is profitable for banks It may take many years for the GDP gap to close on its own 6 Which of the following describes the time required for Congress to recgonize that the economy is experiencing a recession Legislative lag Recognition lag Implementation lag Presidential lag 7 If Congress implements contractionary fiscal policy to address a negative GDP gap rather than allowing the economy to self correct, The economy will eliminate the gap more quickly and the rate of inflation will fall The economy will eliminate the gap more quickly and the rate of inflation will rise The economy will eliminate the gap more slowly and the rate of inflation will fall The economy will eliminate the gap more slowly and the rate of inflation will rise 8 You are an aide to Representative Cory Bush, a progressive St Louis Congresswoman who supports a large role for government in the economy If Congress needs to implement a contractionary policy, which fiscal policies would you suggest that she support Explain your logic

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1. When government outlays are greaterthan revenues, the national debt _, and when the government's outlays aresmallerthanrevenues,the national debt . GROWS; SHRINKS SHRINKS; GROWS GROWS;

1. When government outlays are greaterthan revenues, the national debt _______, and when the government's outlays aresmallerthanrevenues,the national debt ______.

GROWS; SHRINKS
SHRINKS; GROWS
GROWS; DOES NOT CHANGE
DOES NOT CHANGE; SHRINK

2. A progressive tax is one that takes a ____ percentage of your income as your income _____.

LARGER; DECLINES
SMALLER; RISES
FLAT; DECLINES
SMALLER; FALLS

3. During expansions, automatic stabilizers are designed to moderate the increase in spending. Which of the following best describes automatic fiscal policy during an expansion?

GOVERNMENT OUTLAYS AND TAX REVENUES FALL
GOVERNMENT OUTLAYS RISE AND TAX REVENUES FALL
GOVERNMENT OUTLAYS AND TAX REVENUES RISE
GOVERNMENT OUTLAYS FALL AND TAX REVENUES RISE

4. Which of the following is an appropriatefiscalpolicyresponse to a positive GDP gap?

Raise real interest rates
Raise income tax rates
Increase government spending
Lower real interest rates.

5. Our macroeconomic model suggests that after an increase in aggregate demand like that of the 2007, the economy will self correct and return to a position where the GDP gap is zero. If this is correct, why should the government ever intervene with fiscal policy?

This is part of the government's "mission statement" as given in the constitution
People do not trust the theory behind the model.
Fiscal policy is profitable for banks.
It may take many years for the GDP gap to close on its own.

6. Which of the following describes the time required for Congress to recgonize that the economy is experiencing a recession?

Legislative lag
Recognition lag
Implementation lag
Presidential lag

7. If Congress implements contractionary fiscal policy to address a negative GDP gap rather than allowing the economy to self correct,

The economy will eliminate the gap more quickly and the rate of inflation will fall
The economy will eliminate the gap more quickly and the rate of inflation will rise
The economy will eliminate the gap more slowly and the rate of inflation will fall
The economy will eliminate the gap more slowly and the rate of inflation will rise.

8. You are an aide to Representative Cory Bush, a progressive St. Louis Congresswoman who supports a large role for government in the economy. If Congress needs to implement a contractionary policy, which fiscal policies would you suggest that she support? Explain your logic.