1. Which of the following is an example of discretionary fiscal policy?

2. The majority of dollars spent by government prior to the Great Depression was spending at the ________ level. In the post World War II period, two-thirds to three quarters of all dollars spent by government in the United States are spent at the ________ level/

3. The fastest growing category of government expenditure is

4 .Year Potential Real GDP Real GDP Price Level

2013 $14.0 trillion $14.0 trillion 150

2014 14.5 trillion 14.8 trillion 154

Consider the hypothetical information in the table above for potential real GDP, real GDP and the price level in 2013 and in 2014 if the Congress and the president do not use fiscal policy. If the Congress and the president want to keep real GDP at its potential level in 2014, they should

5. A permanent tax cut would likely ________ consumption spending ________ than would a tax rebate like the one issued in 2008.

6. If government spending and the price level increase, then

7. During recessions, government expenditure automatically

8. According to the short-run Phillips curve, the unemployment rate and the inflation rate are

9. What is the natural rate of unemployment?

10. What impact does monetary policy have on the long-run Phillips curve?

11. In the long run, the Federal Reserve can control which of the following?

12. Contractionary monetary policy will result in

13. If the Federal Reserve announces that its TARGET for the federal funds rate is rising from 4 percent to 4.25 percent, how do you expect workers and firms to react?

14. If the Fed decided to reverse its policy actions implemented during the heart of the last recession, the Fed would be acting to try to prevent

15.If foreign holdings of U.S. dollars increase, holding all else constant

16. The balance of trade includes trade in

17. Currency traders expect the value of the dollar to fall. What effect will this have on the demand for dollars and the supply of dollars in the FOREIGN EXCHANGE market?

18. What impact might an increase in the budget deficit have on interest rates and exchange rates?