Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Macroeconomics > Quiz #7 Review > Flashcards

Quiz #7 Review Flashcards

1
Q

automatic stabilizers

A

government spending and taxes that automatically increase or decrease with the business cycle

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

when times are good, tax revenues ___________

A

INCREASE

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

when times are bad, tax revenue __________

A

decreases

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

when times are bad, government spends more on _____________

A

unemployment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

XX% of government funds go to transfer payments (social security, unemployment, Medicare, Medicaid)

A

43%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

XX% of government spending goes to defense

A

20%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

XX% of government spending goes to interest on debt

A

8%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

XX% of government spending goes to grants to local/state governments

A

15%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

XX% of government spending goes to various other departments of government

A

14%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

In 2012, the federal deficit was…

A

$1.1 trillion

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

can a budget deficit one year be the result of a policy put into place a previous year?

A

YES, we have deficits from the wars in Iraq and Afghanistan

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

the federal deficit has gone (up/down) the past few years

A

DOWN

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Current national debt:

A

$16.7 trillion

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

what portion of the debt does the feds owe to other parts of the federal government?

A

$4.8 trillion

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

portion of debt that the fed owes to people like you and I

A

$3.8 trillion

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

portion of debt the federal government owes to outer countries

A

$5.4 trillion

17
Q

portion of debt the federal government owes the Federal Reserve

A

$1.9 trillion

18
Q

portion of debt the federal government owes to local and state government

A

$0.7 trillion

19
Q

America’s current Debt to GDP ratio

A

105%

20
Q

how many surpluses has the government had in the last forty years?

A

4 surpluses

21
Q

how do we reduce the debt-to-GDP ratio?

A

the government’s GDP must grow at a faster rate than the debt does, dummy!

22
Q

when the government runs a deficit, both savings and investments ___________

A

decline

23
Q

what is on the X and Y axis for the curves regarding market for loanable funds?

A

x: quantity of loanable funds
y: interest rate

24
Q

crowding out

A

a decline in private expenditures as a result of an increase in government purchases

25
Q

how big of a problem is the debt/deficit? 3 things to know (according to Dr. Staihr)

A
  1. interest we pay is money that cant be used for something else.
  2. deficits can raise interest rates, but this doesn’t seem to be happening
  3. higher interest rates can crowd out private investment (doesn’t seem to be happening)
26
Q

American Recovery and Reinvestment Act:

A

a stimulus bill by the Obama Administration that’s purpose was to move AD to the right

  • it is both government spending and tax reductions
  • $825 billion in government spending and tax adjustments
27
Q

how much of the American Recovery and Reinvestment Act was in the form of government spending?

A

63%

28
Q

how much of the American Recovery and Reinvestment Act was in the form of tax adjustments?

A

37%

29
Q

At a minimum, how much did the American Recovery and Reinvestment Act boost GDP? maximum?

A

3% minimum, 9.2% maximum

30
Q

tax multiplier formula

A

tax multiplier = changes in real GDP / changes in taxes

31
Q

tax multiplier formula 2

A

MPC / (1 - MPC)

32
Q

how could the multiplier be less than 1?

A

CROWDING OUT: the claim that governmetn spending reduces private spending
-this is dependent on interest rates going up

33
Q

expansionary fiscal policy

-what is it used for?

A

involves increasing government purchases or decreasing taxes to increase AD
-used to fight way out of recession

34
Q

contractionary financial policy

A

decreasing government spending or raising taxes to decrease AD
-fights rising inflation

35
Q

If the tax multipler is -1.6, a $100 billion cut in taxes would do what?

A

we would expect to see an increase in GDP of $160 billion

36
Q

budget deficit

A

the situation in which the government’s expenditures are greater than its tax revenue

37
Q

budget surplus

A

the situation in which the government’s expenditures are less than its tax revenue

38
Q

cyclically adjusted budget deficit or surplus

A

the deficit or surplus in the federal government budget if the economy were at potential GDP

Macroeconomics (11 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions