If the Full-Employment Surplus as a Percentage of GDP Is

question 117

Multiple Choice

If the full-employment surplus as a percentage of GDP is zero in one year, and 2 percent of GDP the next year, it can be concluded that:

• A)fiscal policy is expansionary.
• B)fiscal policy is contractionary.
• C)the federal government is borrowing money.
• D)the federal government is lending money.

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Definitions:

Sales Tax

A tax imposed by governments on the sale of goods and services, typically calculated as a percentage of the purchase price.

Price

The amount of money required to purchase a good or service, often determined by the interaction of supply and demand.

Quantity Tax

A tax that is levied on a per unit basis, meaning a specified amount is charged for each unit of a good or service sold.

Competitive Suppliers

Entities that compete in a market to offer goods or services, often leading to lower prices and higher quality.