The Clinton administration inherited a budget deficit from its predecessor.
President Clinton instituted major tax increases that
increased the budget deficit during his entire term.
brought the budget into balance and eventually into a surplus.
reduced the budget deficit but increased the federal debt.
reduced the size of the deficit but could not eliminate it.
President George W. Bush used part of the budget surplus inherited from the
Clinton administration to
fund tax cuts.
stimulate the economy that was slowing down following the end of the high-tech
increase government entitlement spending.
both A and B
In 2003, the Bush administration revised the tax bill to include provisions to
delay tax increases from the 2001 bill.
decrease the child tax credit.
lower taxes on dividends.
increase taxes on capital gains.
The prospect of future deficits
encourages government to conduct expansionary fiscal policy.
would prompt government to vastly expand discretionary spending.
requires a government to eliminate all entitlement spending.
limits the ability of government to conduct fiscal policy in the near future.
The federal deficit ________ in 2006 and 2007, and ________ in 2008.
increased, increased further
decreased; decreased further
Recall the Application about the success of the 2009
stimulus package to answer the following question(s).
Recall the application. Economist John B. Taylor found that the temporary tax
cuts which were a part of the 2009 stimulus package
were very successful in stimulating consumption spending.
did very little to stimulate consumption spending.
were split very evenly between consumption spending and household saving.
were primarily used to pay off home mortgage balances.
Recall the application. Economist John B. Taylor found that the aid to state
and local governments which were a part of the 2009 stimulus package were used
increase spending on goods and services.
increase spending on transfer programs, but spending on goods and services
increase spending on transfer programs, goods, and services.
increase spending on infrastructure, but spending on transfer programs
The Obama stimulus package was implemented to assist the economy in its
recovery from recession. This package was designed to shift
A) aggregate demand to the right.
B) aggregate demand to the left.
C) aggregate supply to the left.
D) aggregate demand and aggregate supply to the
The Obama stimulus package included fiscal policy actions designed to assist
the economy in its recovery from recession. These fiscal policy actions would
include ________ government spending and ________ taxes.
At the beginning of the Vietnam War, increased military spending in the United
States decreased unemployment.
An estimate of a household’s long-run average income is called permanent
Consumers often base their spending on their estimated permanent income.
Temporary tax cuts tend to stimulate consumer spending at the same rate as
permanent tax cuts.
The tax cuts of 2008 were valued at approximately one% of GDP.