KEY Macro Questions Lesson 12.doc - KEY ECO-201 Macroeconomics Lesson 12 Fiscal Policy Week 9A 4 short-answer questions 5-points 4 M\/C questions

KEY Macro Questions Lesson 12.doc - KEY ECO-201...

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KEY ECO-201 Macroeconomics Lesson 12 – Fiscal Policy Week 9A 4 short-answer questions @ 5-points 4 M/C questions @ 1-points each Macroeconomics, 2 nd Edition 1. For Discussion - page 263: What is the difference between government expenditures and government purchases? How do the two-variables differ in terms of their effect on GDP? Government expenditures encompass all federal spending, including transfer payments and government purchases. Government purchases include only purchases of goods and services. Government purchases are a part of GDP; transfer payments are not. This component of government spending affects GDP only when the funds received as transfer payments are spent to purchase goods and services. 2. For Discussion – page 263 Federally funded student aid programs generally reduce benefits by $1 for every $1 that recipients earn. Do such programs represent purchases or transfer payments? Are they automatic stabilizers?
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