True or False:
1. The government can use fiscal policy to stimulate the economy out of a recession or to try to bring inflation under control.
2. When tax revenues are greater than government spending, a budget surplus exists.
3. A budget surplus is the most common result of government fiscal policy.
4. An increase in government purchases of goods and services will stimulate the economy by increasing aggregate demand.
5. An increase in taxes will increase aggregate demand.
6. Contractionary fiscal policy will tend to reduce a federal budget surplus or increase a federal budget deficit.
7. Real GDP will tend to change anytime the amount of consumption, investment, government purchases, or net exports changes.
8. If policymakers are unhappy about the present short-run equilibrium GDP, they can deliberately manipulate the level of government purchases in order to obtain a new short-run equilibrium value.
9. Expansionary fiscal policy has the potential to move an economy out of recession.
10. The effect of an increase in aggregate demand depends on the position of the macroeconomic equilibrium prior to the government stimulus.