Question 1

If the federal budget is initially balanced and government expenditures remain constant, then a Jdecrease in GDP will

Accepted Answer

A)  decrease tax revenues and create a budget surplus. 
B)  increase tax revenues and create a budget surplus. 
C)  decrease tax revenues and create a budget deficit. 
D)  increase tax revenues and create a budget deficit. 
A)  decrease tax revenues and create a budget surplus. 
B)  increase tax revenues and create a budget surplus. 
C)  decrease tax revenues and create a budget deficit. 
D)  increase tax revenues and create a budget deficit.

Question 2

Both monetary policy and fiscal policy encounter the problems of lags. Discuss the kinds of
Jlags they encounter and the degree of difficulties they present to policymakers.

Accepted Answer

Monetary policy and fiscal policy both e

Question 3

The various studies of the size of the fiscal multiplier by different economists suggest

Accepted Answer

A)  general agreement that the fiscal multiplier value is relatively high. 
B)  general agreement that the fiscal multiplier value has a range between 0.8 and 1.2. 
C)  general agreement that the fiscal multiplier value is zero. 
D)  there is a wide range of opinion on the size of the fiscal multiplier. 
A)  general agreement that the fiscal multiplier value is relatively high. 
B)  general agreement that the fiscal multiplier value has a range between 0.8 and 1.2. 
C)  general agreement that the fiscal multiplier value is zero. 
D)  there is a wide range of opinion on the size of the fiscal multiplier.

Question 4

Which of the following statements characterizes government purchases in the United States between 2001 and 2011?

Accepted Answer

A)  Government purchases as a share of GDP have declined. 
B)  Government purchases as a share of GDP have increased. 
C)  Government purchases as a share of GDP have remained constant. 
D)  Government purchases have fluctuated widely over this period. 
A)  Government purchases as a share of GDP have declined. 
B)  Government purchases as a share of GDP have increased. 
C)  Government purchases as a share of GDP have remained constant. 
D)  Government purchases have fluctuated widely over this period.

Question 5

Suppose a country has a national debt of $5,000 billion, a GDP of $20,000 billion, and a Jbudget surplus of $130 billion. How much will its new national debt be?

Accepted Answer

A)  $5,130 billion 
B)  $4, 870 billion 
C)  $15,130 billion 
D)  $19, 870 billion 
A)  $5,130 billion 
B)  $4, 870 billion 
C)  $15,130 billion 
D)  $19, 870 billion

Question 6

According to Professor Baotai Wang who examined the crowding out phenomenon in JCanada between 1961-2000, as discussed in the Case in Point, government expenditures for health and education

Accepted Answer

A)  increased human capital and encouraged private sector investment, leading to crowding in. 
B)  did not increase the rate of return on private investment and therefore led to crowding out. 
C)  increased human capital and generated strong supply-side effects. 
D)  led to only small increases in human capital. 
A)  increased human capital and encouraged private sector investment, leading to crowding in. 
B)  did not increase the rate of return on private investment and therefore led to crowding out. 
C)  increased human capital and generated strong supply-side effects. 
D)  led to only small increases in human capital.

Question 7

As discussed in the Case in Point on the size of the fiscal multiplier, a study conducted by John Taylor on the effect of fiscal policy since the year 2000 suggests that

Accepted Answer

A)  the multiplier effect of fiscal policy is much less than that for monetary policy. 
B)  temporary fiscal policy financed through government borrowing implies a multiplier value between 0.8 and 1.5. 
C)  fiscal policy has little effect on the economy and that the multiplier value is effectively zero. 
D)  statistical models are inadequate to determine the multiplier and the multiplier value likely varies based on the state of the economy. 
A)  the multiplier effect of fiscal policy is much less than that for monetary policy. 
B)  temporary fiscal policy financed through government borrowing implies a multiplier value between 0.8 and 1.5. 
C)  fiscal policy has little effect on the economy and that the multiplier value is effectively zero. 
D)  statistical models are inadequate to determine the multiplier and the multiplier value likely varies based on the state of the economy.

Question 8

Government tax and expenditure policies that affect real GDP are called

Accepted Answer

A)  automatic fiscal policy. 
B)  discretionary fiscal policy. 
C)  fiscal policy. 
D)  supply-side policy. 
A)  automatic fiscal policy. 
B)  discretionary fiscal policy. 
C)  fiscal policy. 
D)  supply-side policy.

Question 9

The national debt

Accepted Answer

A)  is the sum of all past federal deficits plus any surpluses. 
B)  grows when the government runs a deficit. 
C)  grows when government spending increases. 
D)  is a major problem facing the U.S. government. 
A)  is the sum of all past federal deficits plus any surpluses. 
B)  grows when the government runs a deficit. 
C)  grows when government spending increases. 
D)  is a major problem facing the U.S. government.

Question 10

An inflationary gap may be eliminated using contractionary fiscal policy.

Accepted Answer

A) True 
 B)False

Question 11

A contractionary fiscal policy will reduce a government budget deficit or increase a government budget surplus and reduce borrowing by the Treasury.

Accepted Answer

A) True 
 B)False

Question 12

An automatic stabilizer tends to increase GDP when it is rising.

Accepted Answer

A) True 
 B)False

Question 13

Suppose in the beginning of 2013, a country has a national debt of $8,000 billion. Its GDP in J2013 is $32,000 billion and its budget deficit of $1,600 billion. Compute its debt-GDP ratio at the end of the year.

Accepted Answer

A)  about 5. 0% 
B)  about 20,0% 
C)  about 25.0% 
D)  about 30% 
A)  about 5. 0% 
B)  about 20,0% 
C)  about 25.0% 
D)  about 30%

Question 14

The national debt is the difference between current government expenditures and taxes.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is an example of crowding out?

Accepted Answer

A)  A decrease in the rate of growth of the stock of money decreases GDP. 
B)  A deficit causes an increase in interest rates, which causes a decrease in investment spending. 
C)  An increase in tariffs causes a decrease in imports. 
D)  A decrease in government housing subsidies causes an increase in private spending on housing. 
A)  A decrease in the rate of growth of the stock of money decreases GDP. 
B)  A deficit causes an increase in interest rates, which causes a decrease in investment spending. 
C)  An increase in tariffs causes a decrease in imports. 
D)  A decrease in government housing subsidies causes an increase in private spending on housing.

Question 16

During an economic expansion,

Accepted Answer

A)  higher income tax revenues tend to automatically increase a budget deficit or reduce a budget surplus. 
B)  higher income tax revenues tend to automatically increase a budget surplus or reduce a budget deficit. 
C)  lower income tax revenues tend to automatically increase a budget deficit or reduce a budget surplus. 
D)  lower income tax revenues tend to automatically increase a budget surplus or reduce a budget deficit. 
A)  higher income tax revenues tend to automatically increase a budget deficit or reduce a budget surplus. 
B)  higher income tax revenues tend to automatically increase a budget surplus or reduce a budget deficit. 
C)  lower income tax revenues tend to automatically increase a budget deficit or reduce a budget surplus. 
D)  lower income tax revenues tend to automatically increase a budget surplus or reduce a budget deficit.

Question 17

Which of the following describes a discretionary fiscal policy action/program?

Accepted Answer

A)  the progressive income tax system 
B)  the unemployment compensation program 
C)  Congress authorizes a temporary increase in unemployment insurance benefits for an additional seven weeks. 
D)  the system of welfare programs 
A)  the progressive income tax system 
B)  the unemployment compensation program 
C)  Congress authorizes a temporary increase in unemployment insurance benefits for an additional seven weeks. 
D)  the system of welfare programs

Question 18

The bulk of transfer payment spending in the United States is undertaken by

Accepted Answer

A)  non-profit organizations in the private sector. 
B)  state governments. 
C)  local governments. 
D)  the federal government. 
A)  non-profit organizations in the private sector. 
B)  state governments. 
C)  local governments. 
D)  the federal government.

Question 19

A reduction in tax rates may result in a short-term reduction in government revenues, but it
Jwill also leave people with more disposable income.

Accepted Answer

A) True 
 B)False

Question 20

An expansionary fiscal policy is likely to result in the Treasury

Accepted Answer

A)  selling more bonds, the prices of bonds falling, and interest rates falling. 
B)  buying more bonds, the prices of bonds rising, and interest rates falling. 
C)  selling more bonds, the prices of bonds rising, and interest rates rising. 
D)  selling more bonds, the prices of bonds falling, and interest rates rising. 
A)  selling more bonds, the prices of bonds falling, and interest rates falling. 
B)  buying more bonds, the prices of bonds rising, and interest rates falling. 
C)  selling more bonds, the prices of bonds rising, and interest rates rising. 
D)  selling more bonds, the prices of bonds falling, and interest rates rising.

If the federal budget is initially balanced and government expenditures remain constant, then a Jdecrease in GDP will

Both monetary policy and fiscal policy encounter the problems of lags. Discuss the kinds of Jlags they encounter and the degree of difficulties they present to policymakers.

The various studies of the size of the fiscal multiplier by different economists suggest

Which of the following statements characterizes government purchases in the United States between 2001 and 2011?

Suppose a country has a national debt of $5,000 billion, a GDP of $20,000 billion, and a Jbudget surplus of $130 billion. How much will its new national debt be?

According to Professor Baotai Wang who examined the crowding out phenomenon in JCanada between 1961-2000, as discussed in the Case in Point, government expenditures for health and education

As discussed in the Case in Point on the size of the fiscal multiplier, a study conducted by John Taylor on the effect of fiscal policy since the year 2000 suggests that

Government tax and expenditure policies that affect real GDP are called

The national debt

An inflationary gap may be eliminated using contractionary fiscal policy.

A contractionary fiscal policy will reduce a government budget deficit or increase a government budget surplus and reduce borrowing by the Treasury.

An automatic stabilizer tends to increase GDP when it is rising.

Suppose in the beginning of 2013, a country has a national debt of $8,000 billion. Its GDP in J2013 is $32,000 billion and its budget deficit of $1,600 billion. Compute its debt-GDP ratio at the end of the year.

The national debt is the difference between current government expenditures and taxes.

Which of the following is an example of crowding out?

During an economic expansion,

Which of the following describes a discretionary fiscal policy action/program?

The bulk of transfer payment spending in the United States is undertaken by

A reduction in tax rates may result in a short-term reduction in government revenues, but it Jwill also leave people with more disposable income.

An expansionary fiscal policy is likely to result in the Treasury

Economics: the Study of Choice

Demand and Supply

Applications of Demand and Supply

Macroeconomics: the Big Picture

Measuring Total Output and Income

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

Economic Development

Socialist Economies in Transition

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Exam 12: Government and Fiscal Policy

If the federal budget is initially balanced and government expenditures remain constant, then a Jdecrease in GDP will

Both monetary policy and fiscal policy encounter the problems of lags. Discuss the kinds of Jlags they encounter and the degree of difficulties they present to policymakers.

The various studies of the size of the fiscal multiplier by different economists suggest

Which of the following statements characterizes government purchases in the United States between 2001 and 2011?

Suppose a country has a national debt of $5,000 billion, a GDP of $20,000 billion, and a Jbudget surplus of $130 billion. How much will its new national debt be?

According to Professor Baotai Wang who examined the crowding out phenomenon in JCanada between 1961-2000, as discussed in the Case in Point, government expenditures for health and education

As discussed in the Case in Point on the size of the fiscal multiplier, a study conducted by John Taylor on the effect of fiscal policy since the year 2000 suggests that

Government tax and expenditure policies that affect real GDP are called

The national debt

An inflationary gap may be eliminated using contractionary fiscal policy.

A contractionary fiscal policy will reduce a government budget deficit or increase a government budget surplus and reduce borrowing by the Treasury.

An automatic stabilizer tends to increase GDP when it is rising.

Suppose in the beginning of 2013, a country has a national debt of $8,000 billion. Its GDP in J2013 is $32,000 billion and its budget deficit of $1,600 billion. Compute its debt-GDP ratio at the end of the year.

The national debt is the difference between current government expenditures and taxes.

Which of the following is an example of crowding out?

During an economic expansion,

Which of the following describes a discretionary fiscal policy action/program?

The bulk of transfer payment spending in the United States is undertaken by

A reduction in tax rates may result in a short-term reduction in government revenues, but it Jwill also leave people with more disposable income.

An expansionary fiscal policy is likely to result in the Treasury

Economics: the Study of Choice

Demand and Supply

Applications of Demand and Supply

Macroeconomics: the Big Picture

Measuring Total Output and Income

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

Economic Development

Socialist Economies in Transition

Filters