Reading Guide: Section 4 Module 21
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1. Explain why there is a "chain reaction" when the government spends more on final goods and services. *
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2. What happens if government purchases of goods and services are reduced instead of increased? How is the multiplier explained? *
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3. What is the difference regarding the spending multiplier when taxes are decreased and/or transfer payments are increased? *
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4. A tax cut is similar to the effect of a transfer (check all true statements).
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5. Which of the following is the correct formula for the tax multiplier? *
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6. Explain what happens when taxes are decreased AND government spending increases. *
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7. When RGDP increases, why does government revenue increase automatically? *
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8. The automatic stabilizers can create contractionary or expansionary policy without Congressional approval. HOW? *
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9. What is the difference between discretionary and automatic fiscal policy? *
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10. Explain why some stimulus plans are more successful than others. *
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You look somewhat confused. Watch this then.
11. Questions for class
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