ECONOMICS
Fiscal Policy - Ch 15
1)
Explain fiscal policy and how it relates to the federal budget?
Fiscal policy is government use of taxing and spending to stabilize the economy. The federal budget is the revenue
and spending plan based on fiscal policy decisions. The two are related because the federal budget expresses the
government’s current fiscal policy.
2)
When does the federal government’s fiscal year begin?
3)
What are two types of expansionary policies?
4)
1.
Increasing government spending
2.
Cutting taxing
st
October 1 - every year
What is the central idea of classical economics?
It is a free market that regulates itself.
5)
Why is full-employment output another way to describe productive capacity?
Productive capacity is the maximum output that an economy can sustain over time. Therefore, it is the output at full
employment.
6)
Compare and contrast Keynesian economics and supply-side economics?
Keynesian economics uses government to increase aggregate demand through both spending and tax cuts.
Supply-side economics tries to increase aggregate supply through tax cuts.
7)
What is a balanced budget?
A budget is one where revenues are equal to expenditures.
8)
What might a budget deficit be related to the national debt?
A budget deficit occurs when spending is greater than revenue. Continued budgets deficits, without sufficient
counteracting budget surpluses, can lead to national debt.
Week 5 of 9.
The 5th quiz towards your final.
Fiscal Policy - Ch 15
Page 1
5/17/13