Question 1

The budget deficit

Accepted Answer

A)  decreased during the Bush Administration. 
B)  reached its peak in the year 2000. 
C)  is the total outstanding borrowing by the government. 
D)  is the difference between government outlays and tax revenues. 
A)  decreased during the Bush Administration. 
B)  reached its peak in the year 2000. 
C)  is the total outstanding borrowing by the government. 
D)  is the difference between government outlays and tax revenues.

Question 2

According to revenue and outlay categories, what are the main components of the federal government budget?

Accepted Answer

The budget is divided between the tax re

Question 3

"European Economic Recovery Plan"
"The European Commission urged EU governments to jointly combat the economic slowdown with billion euros ($256 billion) in spending and tax cuts to boost growth and consumer and business con " The plan "...would see the 27 EU governments spend 1.5 percent of the bloc's gross domestic prod halt the slowdown that has already pushed some European nations into recession."
HYPERLINK "http://www.iht.com/" www.iht.com, 11/26/20
The plan is expected to

Accepted Answer

A)  decrease the recessionary gap and decrease the price level. 
B)  shift the AD curve leftward and decrease the recessionary gap. 
C)  use the autonomous tax multiplier to eliminate the inflationary gap. 
D)  shift the AD curve rightward and increase real GDP. 
A)  decrease the recessionary gap and decrease the price level. 
B)  shift the AD curve leftward and decrease the recessionary gap. 
C)  use the autonomous tax multiplier to eliminate the inflationary gap. 
D)  shift the AD curve rightward and increase real GDP.

Question 4

The use of the U.S. federal budget to help stabilize the economy grew in reaction to the and is known as .

Accepted Answer

A)  stagflation of the 1970s; fiscal policy 
B)  Great Depression of the 1930s; fiscal policy 
C)  Great Depression of the 1930s; monetary policy 
D)  stagflation of the 1970s; government policy 
A)  stagflation of the 1970s; fiscal policy 
B)  Great Depression of the 1930s; fiscal policy 
C)  Great Depression of the 1930s; monetary policy 
D)  stagflation of the 1970s; government policy

Question 5

In October 2008, President Bush enacted the Alternative Minimum Tax Relief Act of 2008, which resulted in lower taxes on labor income. According the supply- side view, this would result in

Accepted Answer

A)  a rightward shift in the supply of labor curve. 
B)  a leftward shift in the supply of labor curve. 
C)  an increase in the tax wedge. 
D)  a movement along the supply of labor curve. 
A)  a rightward shift in the supply of labor curve. 
B)  a leftward shift in the supply of labor curve. 
C)  an increase in the tax wedge. 
D)  a movement along the supply of labor curve.

Question 6

If the government's budget is in surplus even when the economy is at full employment, the surplus is said to be

Accepted Answer

A)  structural. 
B)  cyclical. 
C)  discretionary. 
D)  persisting. 
A)  structural. 
B)  cyclical. 
C)  discretionary. 
D)  persisting.

Question 7

In 2007, France's government had revenue of $1.287 trillion while expenditures totalled $1.356 trillion. GDP was $2.56 trillion. In 2007, the government budget balance was _ and government debt .

Accepted Answer

A)  - $0.69 billion; increased 
B)  $0.69 billion; decreased 
C)  $1.02 trillion; decreased 
D)  $1.27 trillion; increased 
A)  - $0.69 billion; increased 
B)  $0.69 billion; decreased 
C)  $1.02 trillion; decreased 
D)  $1.27 trillion; increased

Question 8

-Economic data for a mythical economy in the years 2002- 2006 are summarized in the figure above. Assume that the spending formulas and tax schedules are identical for all years. When the economy is at full employment, the government has a

Accepted Answer

A)  budget deficit. 
B)  budget surplus. 
C)  procyclical policy. 
D)  balanced budget. 
A)  budget deficit. 
B)  budget surplus. 
C)  procyclical policy. 
D)  balanced budget.

Question 9

Induced taxes and needs- tested spending decrease the multiplier effects.

Accepted Answer

A) True 
 B)False

Question 10

An increase in taxes on labor income shifts the labor supply curve leftward and the after- tax wage rate falls.

Accepted Answer

A) True 
 B)False

Question 11

The structural deficit is the deficit

Accepted Answer

A)  during a recession. 
B)  that would occur at full employment. 
C)  caused by the business cycle. 
D)  during an expansion. 
A)  during a recession. 
B)  that would occur at full employment. 
C)  caused by the business cycle. 
D)  during an expansion.

Question 12

Between 2000 and 2005, Finland increased its tax on dividend (interest) income. As a result, the supply curve for loanable funds shifted _ and the tax wedge .

Accepted Answer

A)  rightward; increased 
B)  leftward; decreased 
C)  rightward; decreased 
D)  leftward; increased 
A)  rightward; increased 
B)  leftward; decreased 
C)  rightward; decreased 
D)  leftward; increased

Question 13

The actual budget deficit is equal to the

Accepted Answer

A)  structural deficit plus the cyclical deficit. 
B)  structural deficit minus the cyclical deficit. 
C)  structural deficit. 
D)  cyclical deficit. 
A)  structural deficit plus the cyclical deficit. 
B)  structural deficit minus the cyclical deficit. 
C)  structural deficit. 
D)  cyclical deficit.

Question 14

If the government increases expenditure by $40 billion and increases autonomous tax receipts by $40 billion, what is the impact on aggregate demand? Explain your answer.

Accepted Answer

Aggregate demand increases. The governme

Question 15

The amount by which a change in government expenditures on goods and services is multiplied to determine the change in aggregate demand that it generates is the .

Accepted Answer

A)  increase in real GDP 
B)  government expenditure multiplier 
C)  goods and services multiplier 
D)  slope of the AE curve 
A)  increase in real GDP 
B)  government expenditure multiplier 
C)  goods and services multiplier 
D)  slope of the AE curve

Question 16

What are automatic stabilizers? How do they help stabilize real GDP?

Accepted Answer

Automatic stabilizers are features of fi

Question 17

Because of automatic stabilizers, when real GDP decreases

Accepted Answer

A)  government expenditures increase and tax revenues decrease. 
B)  government expenditures equal tax revenues. 
C)  the economy will automatically go to full employment. 
D)  government expenditures decrease and tax revenues increase. 
A)  government expenditures increase and tax revenues decrease. 
B)  government expenditures equal tax revenues. 
C)  the economy will automatically go to full employment. 
D)  government expenditures decrease and tax revenues increase.

Question 18

"Obama Considers Delaying Tax Increase"
"U)S. President- elect Barack Obama is considering delaying his proposal to repeal the Bush tax cuts wealthiest Americans in light of the economic downturn."
HYPERLINK "http://www.nytimes.com/" www.nytimes.com, 11/23/20
Obama's possible decision to delay the tax increase recognizes the fact that a tax increase will disposable income and the recessionary gap.

Accepted Answer

A)  decrease; increase 
B)  increase; increase 
C)  decrease; decrease 
D)  increase; decrease 
A)  decrease; increase 
B)  increase; increase 
C)  decrease; decrease 
D)  increase; decrease

Question 19

The government begins year 1 with $25 billion of debt. Based on the information in the above table, what is the amount of debt following year 2?

Accepted Answer

A)  $20 billion 
B)  $250 billion 
C)  $5 billion 
D)  $245 billion 
A)  $20 billion 
B)  $250 billion 
C)  $5 billion 
D)  $245 billion

Question 20

The Laffer curve is the relationship between

Accepted Answer

A)  tax revenue and potential GDP. 
B)  government purchases and potential GDP. 
C)  tax rates and potential GDP. 
D)  tax rates and tax revenue. 
A)  tax revenue and potential GDP. 
B)  government purchases and potential GDP. 
C)  tax rates and potential GDP. 
D)  tax rates and tax revenue.

The budget deficit

According to revenue and outlay categories, what are the main components of the federal government budget?

The use of the U.S. federal budget to help stabilize the economy grew in reaction to the and is known as .

In October 2008, President Bush enacted the Alternative Minimum Tax Relief Act of 2008, which resulted in lower taxes on labor income. According the supply- side view, this would result in

If the government's budget is in surplus even when the economy is at full employment, the surplus is said to be

In 2007, France's government had revenue of $1.287 trillion while expenditures totalled $1.356 trillion. GDP was $2.56 trillion. In 2007, the government budget balance was _ and government debt .

-Economic data for a mythical economy in the years 2002- 2006 are summarized in the figure above. Assume that the spending formulas and tax schedules are identical for all years. When the economy is at full employment, the government has a

Induced taxes and needs- tested spending decrease the multiplier effects.

An increase in taxes on labor income shifts the labor supply curve leftward and the after- tax wage rate falls.

The structural deficit is the deficit

Between 2000 and 2005, Finland increased its tax on dividend (interest) income. As a result, the supply curve for loanable funds shifted _ and the tax wedge .

The actual budget deficit is equal to the

If the government increases expenditure by $40 billion and increases autonomous tax receipts by $40 billion, what is the impact on aggregate demand? Explain your answer.

The amount by which a change in government expenditures on goods and services is multiplied to determine the change in aggregate demand that it generates is the .

What are automatic stabilizers? How do they help stabilize real GDP?

Because of automatic stabilizers, when real GDP decreases

The government begins year 1 with $25 billion of debt. Based on the information in the above table, what is the amount of debt following year 2?

The Laffer curve is the relationship between

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: They Keynesian Model

U.S. Inflation, Unemployment, and Business Cycle

Monetary Policy

International Trade Policy

Filters

Exam 13: Fiscal Policy

The budget deficit

According to revenue and outlay categories, what are the main components of the federal government budget?

The use of the U.S. federal budget to help stabilize the economy grew in reaction to the and is known as .

In October 2008, President Bush enacted the Alternative Minimum Tax Relief Act of 2008, which resulted in lower taxes on labor income. According the supply- side view, this would result in

If the government's budget is in surplus even when the economy is at full employment, the surplus is said to be

In 2007, France's government had revenue of $1.287 trillion while expenditures totalled $1.356 trillion. GDP was $2.56 trillion. In 2007, the government budget balance was _ and government debt .

-Economic data for a mythical economy in the years 2002- 2006 are summarized in the figure above. Assume that the spending formulas and tax schedules are identical for all years. When the economy is at full employment, the government has a

Induced taxes and needs- tested spending decrease the multiplier effects.

An increase in taxes on labor income shifts the labor supply curve leftward and the after- tax wage rate falls.

The structural deficit is the deficit

Between 2000 and 2005, Finland increased its tax on dividend (interest) income. As a result, the supply curve for loanable funds shifted _ and the tax wedge .

The actual budget deficit is equal to the

If the government increases expenditure by $40 billion and increases autonomous tax receipts by $40 billion, what is the impact on aggregate demand? Explain your answer.

The amount by which a change in government expenditures on goods and services is multiplied to determine the change in aggregate demand that it generates is the .

What are automatic stabilizers? How do they help stabilize real GDP?

Because of automatic stabilizers, when real GDP decreases

The government begins year 1 with $25 billion of debt. Based on the information in the above table, what is the amount of debt following year 2?

The Laffer curve is the relationship between

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: They Keynesian Model

U.S. Inflation, Unemployment, and Business Cycle

Monetary Policy

International Trade Policy

Filters