Question 1

Corporate income taxes are the largest source of revenue for the federal government.

Accepted Answer

A) True 
 B)False

Question 2

Suppose the government of Japan increases its expenditure on goods and services. In the short run, this increase will

Accepted Answer

A)  cause the price level in Japan to fall. 
B)  shift the AD curve in Japan leftward. 
C)  shift the AD curve in Japan rightward. 
D)  None of the above answers is correct. 
A)  cause the price level in Japan to fall. 
B)  shift the AD curve in Japan leftward. 
C)  shift the AD curve in Japan rightward. 
D)  None of the above answers is correct.

Question 3

In response to the economic crisis in 2008, President Merkel "highlighted in her speech what the Ge government has already done: a financial sector rescue package worth up to €500 billion, and a prop stimulus package of tax breaks and spending measures aimed at triggering investments of up to €50 over the next two years."
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Which of the following statements describes Germany's policies?

Accepted Answer

A)  Germany's AD will shift rightward. 
B)  The government has enacted discretionary fiscal policy. 
C)  The impact lag will weaken the immediate effect the measures will have on real GDP. 
D)  All of the above are correct. 
A)  Germany's AD will shift rightward. 
B)  The government has enacted discretionary fiscal policy. 
C)  The impact lag will weaken the immediate effect the measures will have on real GDP. 
D)  All of the above are correct.

Question 4

If the government wants to engage in fiscal policy to increase real GDP, it could

Accepted Answer

A)  decrease government expenditure in order to increase short- run aggregate supply. 
B)  increase government expenditure in order to increase short- run aggregate supply. 
C)  decrease government expenditure in order to decrease aggregate demand. 
D)  increase government expenditure in order to increase aggregate demand. 
A)  decrease government expenditure in order to increase short- run aggregate supply. 
B)  increase government expenditure in order to increase short- run aggregate supply. 
C)  decrease government expenditure in order to decrease aggregate demand. 
D)  increase government expenditure in order to increase aggregate demand.

Question 5

"The federal budget is required by law to balance." Is the previous statement correct or incorrect?

Accepted Answer

The statement is incorrect bec

Question 6

A balanced budget occurs when government

Accepted Answer

A)  outlays exceeds tax revenues. 
B)  tax revenues equals outlays. 
C)  tax revenues exceeds outlays. 
D)  expenditure is zero. 
A)  outlays exceeds tax revenues. 
B)  tax revenues equals outlays. 
C)  tax revenues exceeds outlays. 
D)  expenditure is zero.

Question 7

When interest income is taxed and the inflation rate rises, the tax revenue collected by the government

Accepted Answer

A)  increases. 
B)  could either increase or decrease. 
C)  doesn't change. 
D)  decreases. 
A)  increases. 
B)  could either increase or decrease. 
C)  doesn't change. 
D)  decreases.

Question 8

Which one of the following statements about the budget deficit or surplus over the business cycle is correct?

Accepted Answer

A)  Automatic fluctuations in the budget deficit act as automatic stabilizers. 
B)  When the economy is in an expansion, the budget deficit tends to increase. 
C)  When the economy is in recession the budget surplus tends to increase. 
D)  When GDP decreases, the budget deficit tends to decrease. 
A)  Automatic fluctuations in the budget deficit act as automatic stabilizers. 
B)  When the economy is in an expansion, the budget deficit tends to increase. 
C)  When the economy is in recession the budget surplus tends to increase. 
D)  When GDP decreases, the budget deficit tends to decrease.

Question 9

In 2009, the federal government of Happy Isle had tax revenues of $1 million, and spent $500,000 on transfer payments, $250,000 on goods and services and $300,000 on debt interest. In 2009, the government of Happy Isle had a .

Accepted Answer

A)  budget deficit of $50,000 
B)  balanced budget 
C)  budget deficit of $1,050,000 
D)  budget surplus of $50,000 
A)  budget deficit of $50,000 
B)  balanced budget 
C)  budget deficit of $1,050,000 
D)  budget surplus of $50,000

Question 10

A government budget deficit occurs when

Accepted Answer

A)  government spending is more than what it collects in taxes. 
B)  U.S. consumers buy more than U.S. producers produce. 
C)  the value of U.S. imports exceed the value of U.S. exports. 
D)  foreign holdings of American assets exceed American holdings of foreign assets. 
A)  government spending is more than what it collects in taxes. 
B)  U.S. consumers buy more than U.S. producers produce. 
C)  the value of U.S. imports exceed the value of U.S. exports. 
D)  foreign holdings of American assets exceed American holdings of foreign assets.

Question 11

Generational accounting shows that the present value of the government's commitments to pay benefits are the present value of its taxes.

Accepted Answer

A)  greater than 
B)  not comparable to 
C)  less than 
D)  equal to 
A)  greater than 
B)  not comparable to 
C)  less than 
D)  equal to

Question 12

The Council of Economic Advisors advises the

Accepted Answer

A)  House of Representatives. 
B)  Senate. 
C)  Congress. 
D)  President. 
A)  House of Representatives. 
B)  Senate. 
C)  Congress. 
D)  President.

Question 13

-What is the amount of the surplus or deficit incurred in year 3 by the government shown in the above table?

Accepted Answer

A)  $5 billion deficit 
B)  $5 billion surplus 
C)  $0 
D)  $260 billion surplus 
A)  $5 billion deficit 
B)  $5 billion surplus 
C)  $0 
D)  $260 billion surplus

Question 14

A fall in income that results in a decrease in tax revenues is an example of .

Accepted Answer

A)  automatic fiscal policy 
B)  a recession 
C)  needs- tested tax programs 
D)  discretionary fiscal policy 
A)  automatic fiscal policy 
B)  a recession 
C)  needs- tested tax programs 
D)  discretionary fiscal policy

Question 15

Discretionary fiscal policy is the

Accepted Answer

A)  use of government expenditures and taxation to pursue macroeconomic goals. 
B)  control of the money supply as a tool of macroeconomic policy. 
C)  control of government expenditures but not taxes. 
D)  use of taxation but not government spending to pursue macroeconomic goals. 
A)  use of government expenditures and taxation to pursue macroeconomic goals. 
B)  control of the money supply as a tool of macroeconomic policy. 
C)  control of government expenditures but not taxes. 
D)  use of taxation but not government spending to pursue macroeconomic goals.

Question 16

A decrease in government expenditure shifts the AD curve and a decrease in taxes shifts the AD curve .

Accepted Answer

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

Question 17

What is the largest source of revenue for the federal government?

Accepted Answer

A)  Social Security taxes 
B)  sales tax 
C)  corporate income taxes 
D)  personal income taxes 
A)  Social Security taxes 
B)  sales tax 
C)  corporate income taxes 
D)  personal income taxes

Question 18

Suppose that the government decreases its expenditures on goods and services. Within the AS- AD
Model, the result will be in real GDP and in the price level.

Accepted Answer

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

Question 19

An economy has real GDP of $300 billion and potential GDP of $240 billion. To move the economy to potential GDP, the government should taxes and/or _ _ government expenditure.

Accepted Answer

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

Question 20

The purpose of fiscal policy is to

Accepted Answer

A)  maintain price level stability. 
B)  achieve full employment. 
C)  promote economic growth. 
D)  All of the above answers are correct. 
A)  maintain price level stability. 
B)  achieve full employment. 
C)  promote economic growth. 
D)  All of the above answers are correct.

Corporate income taxes are the largest source of revenue for the federal government.

Suppose the government of Japan increases its expenditure on goods and services. In the short run, this increase will

If the government wants to engage in fiscal policy to increase real GDP, it could

"The federal budget is required by law to balance." Is the previous statement correct or incorrect?

A balanced budget occurs when government

When interest income is taxed and the inflation rate rises, the tax revenue collected by the government

Which one of the following statements about the budget deficit or surplus over the business cycle is correct?

In 2009, the federal government of Happy Isle had tax revenues of $1 million, and spent $500,000 on transfer payments, $250,000 on goods and services and $300,000 on debt interest. In 2009, the government of Happy Isle had a .

A government budget deficit occurs when

Generational accounting shows that the present value of the government's commitments to pay benefits are the present value of its taxes.

The Council of Economic Advisors advises the

-What is the amount of the surplus or deficit incurred in year 3 by the government shown in the above table?

A fall in income that results in a decrease in tax revenues is an example of .

Discretionary fiscal policy is the

A decrease in government expenditure shifts the AD curve and a decrease in taxes shifts the AD curve .

What is the largest source of revenue for the federal government?

Suppose that the government decreases its expenditures on goods and services. Within the AS- AD Model, the result will be in real GDP and in the price level.

An economy has real GDP of $300 billion and potential GDP of $240 billion. To move the economy to potential GDP, the government should taxes and/or _ _ government expenditure.

The purpose of fiscal policy is to

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

Corporate income taxes are the largest source of revenue for the federal government.

Suppose the government of Japan increases its expenditure on goods and services. In the short run, this increase will

If the government wants to engage in fiscal policy to increase real GDP, it could

"The federal budget is required by law to balance." Is the previous statement correct or incorrect?

A balanced budget occurs when government

When interest income is taxed and the inflation rate rises, the tax revenue collected by the government

Which one of the following statements about the budget deficit or surplus over the business cycle is correct?

In 2009, the federal government of Happy Isle had tax revenues of $1 million, and spent $500,000 on transfer payments, $250,000 on goods and services and $300,000 on debt interest. In 2009, the government of Happy Isle had a .

A government budget deficit occurs when

Generational accounting shows that the present value of the government's commitments to pay benefits are the present value of its taxes.

The Council of Economic Advisors advises the

-What is the amount of the surplus or deficit incurred in year 3 by the government shown in the above table?

A fall in income that results in a decrease in tax revenues is an example of .

Discretionary fiscal policy is the

A decrease in government expenditure shifts the AD curve and a decrease in taxes shifts the AD curve .

What is the largest source of revenue for the federal government?

Suppose that the government decreases its expenditures on goods and services. Within the AS- AD Model, the result will be in real GDP and in the price level.

An economy has real GDP of $300 billion and potential GDP of $240 billion. To move the economy to potential GDP, the government should taxes and/or _ _ government expenditure.

The purpose of fiscal policy is to

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