1) List 2 disadvantages of deficit spending in the economy

1) List 2 disadvantages of deficit spending in the economy.
1. __________________________________________________________________
2. __________________________________________________________________
2. If the government is running a deficit, explain what will happen to aggregate
demand _____________; the price level ______________; and real GDP. ______
Assume the economy is operating in region II (Intermediate region) of the aggregate
supply curve.
3. Deficit spending will cause interest rates to ___________________; thus causing the
level of consumption and investment to. ________________________
4. Give 2 examples of automatic stabilizers in the economy.
1. __________________________________________________________________
2. __________________________________________________________________
5. State 2 ways the government could enact expansionary fiscal policy, which would
shift aggregate demand out and to the right.
1. __________________________________________________________________
2. __________________________________________________________________
6. Government fiscal crowd out will impact the following how (increase or decrease)?
1. interest rates ________________
2. investment spending _______________
3. consumption spending _______________
7. State 3 sources of revenue for the government:
1. _______________________________
2. _______________________________
3. _______________________________
8. Developed countries get the largest percentage of income from taxes on __________.
9. Developing countries get the largest percentage of income from taxes on _________ .

10. A tax rate that rises when income rises is a ____________ tax.