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journal article Budget Deficit and Full EmploymentJournal of Post Keynesian Economics Vol. 22, No. 4 (Summer, 2000) , pp. 549-563 (15 pages) Published By: Taylor & Francis, Ltd. https://www.jstor.org/stable/4538700 Read and download Log in through your school or library Purchase article $51.00 - Download now and later Journal Information JPKE is a scholarly journal of innovative theoretical and empirical work that examines contemporary economic problems. It is committed to the principle that the cumulative development of economic theory is possible only when the theory is continuously subjected to scrutiny in terms of its ability to both explain the real world and to provide a reliable guide to public policy. As reviewed in Magazines for Libraries, the articles in JPKE, "pose answers to troublesome questions. . .This journal is important because of the subject matter it covers." Publisher Information Building on two centuries' experience, Taylor & Francis has grown rapidlyover the last two decades to become a leading international academic publisher.The Group publishes over 800 journals and over 1,800 new books each year, coveringa wide variety of subject areas and incorporating the journal imprints of Routledge,Carfax, Spon Press, Psychology Press, Martin Dunitz, and Taylor & Francis.Taylor & Francis is fully committed to the publication and dissemination of scholarly information of the highest quality, and today this remains the primary goal. Rights & Usage This item is part of a JSTOR Collection.
Refer to the diagram, in which Qf is the full-employment output. A contractionary fiscal policy would be most appropriate if the economy's present aggregate demand curve were at: A major advantage of the built-in or automatic stabilizers is that they: require no legislative action by Congress to be made effective. Refer to the diagram, where T is tax revenues and G is government expenditures. All figures are in billions of dollars. If the full-employment GDP is $400 billion while the actual GDP is $200 billion, the: actual budget deficit exceeds the cyclically adjusted budget deficit. With the expenditures programs and the tax system shown in the diagram: deficits will occur at income levels below K, and surpluses above K. Refer to the diagrams. Suppose that government undertakes fiscal policy designed to increase aggregate demand from AD1 to AD2 and thereby to increase GDP from X to Z. In terms of graph B, which of the following might explain why GDP increases to Y rather than to Z? Offsetting state and local finance. An effective expansionary fiscal policy will: increase the cyclically adjusted deficit but reduce the actual deficit. The cyclically adjusted budget tells us: what the size of the federal budget deficit or surplus would be if the economy was at full employment. The public debt for the economy is: The crowding-out effect of expansionary fiscal policy suggests that: government spending increases at the expense of private investment. Contractionary fiscal policy is so named because it: is aimed at reducing aggregate demand and thus achieving price stability. Expansionary fiscal policy is so named because it involves an expansion of the nation's money supply. True or False The crowding-out effect suggests that: government borrowing to finance the public debt increases the real interest rate and reduces private investment. An appropriate fiscal policy for severe demand-pull inflation is: Refer to the diagram. Which tax system has the least built-in stability? A tax reduction of a specific amount will be more expansionary the: larger is the economy's MPC. The cyclically adjusted budget refers to: the size of the federal government's budgetary surplus or deficit when the economy is operating at full employment. Discretionary fiscal policy is so named because it: involves specific changes in T and G undertaken expressly for stabilization at the option of Congress. The crowding-out effect is: strongest when the economy is at full employment. Fiscal policy is mainly undertaken by the Federal Reserve. True or False Refer to the diagram, where T is tax revenues and G is government expenditures. All figures are in billions of dollars. If the full-employment GDP is $400 billion while the actual GDP is $200 billion, the actual budget deficit is: The crowding-out effect of expansionary fiscal policy suggests that: increases in government spending financed through borrowing will increase the interest rate and thereby reduce investment. Refer to the figure. Suppose that the economy is currently operating at the intersection of AS and AD2, and that the full-employment level of output is Y. If the government wants to move the level of real GDP back to Y and reduce demand-pull inflation, in the presence of a ratchet effect, it should: enact a contractionary fiscal policy that will shift aggregate demand to the left, but not as far as AD1. Economists refer to a budget deficit that exists when the economy is achieving full employment as a: cyclically adjusted deficit. Refer to the figure. Suppose that the economy is currently operating at the intersection of AS and AD2, and that the full-employment level of output is Y. If contractionary fiscal policy and accompanying multiplier effects move aggregate demand from AD2 to AD1, what will be the effect on real GDP and the price level? Real GDP will fall to X and the price level will remain unchanged, assuming a ratchet effect occurs. Built-in stability is synonymous with discretionary fiscal policy. What is a budget deficit economics quizlet?Budget deficit. The amount by which expenditures of the federal government exceeded its revenues in any year.
When there is a budget deficit quizlet?A government budget deficit exists if the government spends more than it receives in taxes during a given period of time. A situation in which the government's spending is exactly equal to the total taxes and other revenues it collects during a given period of time.
When the current tax revenues exceed current government expenditures and the economy is achieving full employment?When current tax revenues exceed current government expenditures and the economy is achieving full employment: contractionary fiscal policy. Suppose the government purposely changes the economy's cyclically-adjusted budget from a deficit of 3 percent of real GDP to a surplus of 1 percent of real GDP.
What does fiscal policy refer to?Fiscal policy is the use of government spending and taxation to influence the economy. Governments typically use fiscal policy to promote strong and sustainable growth and reduce poverty.
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Economists refer to a budget deficit that exists when the economy is achieving full employment as a:
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