Unemployment benefits are an example of fiscal policy

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Macroeconomics: Principles & Policy
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Chapter 9 / Exercise 2
Macroeconomics: Principles & Policy
Baumol/Blinder
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13. Unemployment benefits are an example of fiscal policy.A) TrueB) FalseCorrect Answer(s):False
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14. According to Ricardian Equivalence in a strict sense, the tax multiplier is zero.
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We have textbook solutions for you!
The document you are viewing contains questions related to this textbook.
Macroeconomics: Principles & Policy
The document you are viewing contains questions related to this textbook.
Chapter 9 / Exercise 2
Macroeconomics: Principles & Policy
Baumol/Blinder
Expert Verified
15. When looking at the GDP data from quarter 3 of 2012, government purchases accounted for a larger share of the economy than investment expenditures did.
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16. According to one of the lectures featuring a pie chart on federal government expenditures, transfer payments went from about 25% of total expenditures in the 1960s to over 46% of total expenditures in 2010.
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17. As of 2010, interest payments on the federal debt exceeded 10% of total expenditures.A) TrueB) FalseCorrect Answer(s):False
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18. We argued that the tax revenue that the federal government collects is pro-cyclical, that is, when economic activity is growing so is tax revenue. An example of this is the new economy when tax revenue increased along with the economic growth.
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19. If aggregate expenditures exceed aggregate income then inventories will rise and firms will eventually lay off workers.
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20. We argued that cutting the corporate income tax will have supply side effects in that cutting the corporate income tax can potentially increase the pace of technological change with the implication being the aggregate supply will shift to the right.
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21. According to the Laffer curve, increases in tax rates always result in less tax revenue.A) TrueB) FalseCorrect Answer(s):False
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22. One reason that tax revenue may fall when tax rates are increased is due to tax evasion, that is,the higher the tax rate, the higher the probability of the tax evasion and thus, lower tax revenue. The example I used was when Canada quadrupled the tax rate on cigarettes Canadian citizens sought out to buy illegally smuggled in US cigarettes to evade the tax on Canadian cigarettes.
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