Suppose the debt-to-GDP ratio rose to 100% and the interest rate on the debt were 5% per year, is the fraction of GDP that goes toward paying interest on the debt a bigger share of GDP than Social Security is today? Use the information in the figure below and the fact that government spending to GDP is 20%. A Bigger. > Smaller. & Can't tell. Figure 4 U.S. Federal Spending: Major Programs (2023) Which of the following is an \"automatic stabilizer\" in the U.S. economy? There may be more than one. Select all that apply Consumers usually spend some of their savings and eat food from the pantry during recessions. Business owners usually purchase more capital equipment whenever RN Governments automatically transfer cash to the unemployed when the economy is weak. When Americans have less demand for U.S. manufactured products foreigners might pick up some of the slack buying these unsold U.S.-made goods. Which of the following government policies are "automatic stabilizers\" for the economy? /A Unemployment insurance Temporary tax cuts that Congress passes when bad economic news hits Temporary spending increases that Congress passes when bad economic news hits If an economy appears to be growing rapidly and inflation appears to be becoming a serious problem, which of the following fiscal policies would be appropriate? A A decrease in capital gains taxes A decrease in government spending A reduction in personal income taxes An increase in government transfer payments An increase in government spending will cause the demand for money to , then interest rates to . which in turn causes investment spending to A decrease; decrease; increase B increase; decrease; increase C increase; increase; decrease D decrease; increase; increase Consider the following quote: "Over one and a half million people were laid off from jobs following the doubling of oil prices in 1979." What was the policy dilemma faced by monetary and fiscal policy makers? Rising prices and falling unemployment Rising prices and rising unemployment Rising prices and rising interest rates Rising prices and increased consumer confidence What happens to a government deficit if private spending in the economy slows its o] e\\ Vala ks The deficit will not necessarily change. The deficit will get larger than what it would have otherwise been. The deficit will get smaller than what It would have otherwise been. The deficit will get larger and then smaller as it affects the economy. A temporary income tax cut will be effective as a fiscal policy than a permanent change because more; the government deficit will not Increase by as much as it will if the tax cut is permanent more; future income is not affected less: the government deficit will Increase by more than it will if the tax cut is permanent less: future income is not affected Recall the national expenditure equation, GDP=C+I+G+NX. If government spending Increases, then we model that as an increase in A Most federal government transfers of cash (i.e. transfer payments) go to X. Most federal government purchases of health care go to Y. A X = older people, Y=poor B X = older people, Y=older people C X = poor, Y=poor D X = poor, Y=older peopleWhich of the following actual government programs show up as costs in the federal budget? @ Select all that apply The Department of Labor mandates the minimum wage for workers. The Environmental Protection Agency mandates that cars have equipment to keep pollution levels low. The National Oceanic and Atmospheric Administration forecasts the weather. The Coast Guard rescues sailors from a sinking yacht off the coast of Cape Cod. The Border Patrol requires that all vehicles driving on highways out of San Diego be stopped to inspect for the presence of undocumented immigrants. Using the figure here, suppose that there's a rise in v due to business optimismwhat Keynes called the "animal spirits\" of investors. This pushes us to AD(2). If the government's goal is to keep output close to the long-run aggregate supply rate, and if fiscal policy is the tool that the government wants to use, what should it do? A rise in taxes OR arise in government spending A\\ A rise in taxes OR a fall in government spending A fall in taxes OR a rise in government spending A fall in taxes OR a fall in government spending Using the following figure, suppose that a change in fiscal policy shifts AD from AD(1) to AD(2). Which response would be most likely to cause that shift? Choose one: a, b, , or d. Is this expansionary or contractionary fiscal policy? A rise in taxes OR arise Iin government spending A A rise in taxes OR a fall in government spending A fall in taxes OR a rise in government spending A fall in taxes OR a fall in government spending Real GDP growth rate 1. Fiscal policy cannot cure all ills. Sometimes: I. The economy needs a long-run boost. il. The problem isn't low AD, but low LRAS growth. iii. Almost all machines and workers are employed: they're just not very productive: Sort the following cases into either \"fiscal solution possible\" or \"productivity problem: @ Drag and drop options on the right-hand side to swap positions and match with items on the left. Reordering may cause items on the right-hand side to swap positions. American wages fiscal solution have grown slowly possible for many years. Peasants in the Productivity Middle Ages are problem using primitive tools to produce food. Peasants in the Productivity Middle Ages suffer problem from a drought that hurts the season's Crops. American workers get laid off by the hundreds of thousands because of a rapid collapse in investment purchases. Schools are doing a bad job teaching students so students become ineffective employees. High taxes on investment discourage people from saving and building up the capital stock for future workers to use. High taxes on investment discourage N [alEIS =i ge ]t purchasing investment goods. fiscal solution possible Productivity problem Productivity problem Productivity