Question 1

During the Reagan administration in the 1980s, tax rates were and the budget deficit
)

Accepted Answer

A)  cut; increased 
B)  cut; decreased 
C)  raised; decreased 
D)  raised; increased 
A)  cut; increased 
B)  cut; decreased 
C)  raised; decreased 
D)  raised; increased

Question 2

Which of the following is NOT a revenue source for the Federal government?

Accepted Answer

A)  interest on corporate bond holdings 
B)  social security taxes 
C)  indirect taxes 
D)  personal income taxes 
A)  interest on corporate bond holdings 
B)  social security taxes 
C)  indirect taxes 
D)  personal income taxes

Question 3

If tax receipts are greater than government outlays the government has a budget surplus.

Accepted Answer

A) True 
 B)False

Question 4

An example of an automatic fiscal policy stabilizer is when

Accepted Answer

A)  the president drafts a bill to reduce defense spending. 
B)  tax revenues decrease as real GDP decreases. 
C)  Congress passes a law that raises tax rates. 
D)  Congress decides to cut government expenditure. 
A)  the president drafts a bill to reduce defense spending. 
B)  tax revenues decrease as real GDP decreases. 
C)  Congress passes a law that raises tax rates. 
D)  Congress decides to cut government expenditure.

Question 5

"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
Which of the following describe the EU's plan?
i. It is discretionary fiscal policy
ii. It is contractionary fiscal policy
iii. It will generate a cyclical surplus.

Accepted Answer

A)  i only. 
B)  i and iii only. 
C)  i and ii only. 
D)  i, ii and iii. 
A)  i only. 
B)  i and iii only. 
C)  i and ii only. 
D)  i, ii and iii.

Question 6

A report on the EU economic stimulus plan suggested that "... Governments must consider ... cutting VAT [value added tax] and labor taxes ..." The VAT is similar to a sales tax. If governments follow the suggestions, there will be according to the supply- side view.

Accepted Answer

A)  an upward shift in the aggregate production function 
B)  an increase in saving and an increase in the tax wedge 
C)  an increase in the labor supply and an increase in the tax wedge 
D)  an increase in labor supply and a decrease in the tax wedge 
A)  an upward shift in the aggregate production function 
B)  an increase in saving and an increase in the tax wedge 
C)  an increase in the labor supply and an increase in the tax wedge 
D)  an increase in labor supply and a decrease in the tax wedge

Question 7

What is the difference between discretionary fiscal policy and automatic stabilizers?

Accepted Answer

Discretionary fiscal policy is a policy

Question 8

Splitting the fiscal imbalance between current and future generations is called

Accepted Answer

A)  genealogical accounting. 
B)  actuarial accounting. 
C)  actuarial balance. 
D)  generational imbalance. 
A)  genealogical accounting. 
B)  actuarial accounting. 
C)  actuarial balance. 
D)  generational imbalance.

Question 9

-The figure above illustrates the aggregate demand, short- run aggregate supply, and long- run aggregate supply in Lotus Land. The economy is currently at point D and the government decreases its taxes. The economy will move to . The price level will , and the change in real GDP will be the increase in aggregate demand.

Accepted Answer

A)  point A; fall; less than 
B)  point C; rise; less than 
C)  point D; rise; less than 
D)  point B; remain constant; the same as 
A)  point A; fall; less than 
B)  point C; rise; less than 
C)  point D; rise; less than 
D)  point B; remain constant; the same as

Question 10

An increase in the income tax rate employment and _ potential GDP.

Accepted Answer

A)  decreases; decreases 
B)  decreases; increases 
C)  increases; increases 
D)  increases; decreases 
A)  decreases; decreases 
B)  decreases; increases 
C)  increases; increases 
D)  increases; decreases

Question 11

Which of the following is considered a purpose of the federal budget?
I. To help the economy achieve full employment.
II. To finance the activities of the federal government.
III. To promote sustained economic growth.

Accepted Answer

A)  I and II 
B)  I and III 
C)  I, II and III 
D)  II and III 
A)  I and II 
B)  I and III 
C)  I, II and III 
D)  II and III

Question 12

Historically, the budget deficit has tended to

Accepted Answer

A)  increase during a recession. 
B)  decrease during a recession. 
C)  decline steadily over time. 
D)  remain the same over the business cycle. 
A)  increase during a recession. 
B)  decrease during a recession. 
C)  decline steadily over time. 
D)  remain the same over the business cycle.

Question 13

Income taxes in the United States are automatic stabilizers because

Accepted Answer

A)  tax rates can be adjusted by the Congress to counteract economic fluctuations. 
B)  the President can increase tax rates whenever the President deems such a policy appropriate. 
C)  tax revenues decrease when income increases, intensifying the increase in aggregate demand. 
D)  tax revenues increase when income increases, thus offsetting some of the increase in aggregate demand. 
A)  tax rates can be adjusted by the Congress to counteract economic fluctuations. 
B)  the President can increase tax rates whenever the President deems such a policy appropriate. 
C)  tax revenues decrease when income increases, intensifying the increase in aggregate demand. 
D)  tax revenues increase when income increases, thus offsetting some of the increase in aggregate demand.

Question 14

The aggregate demand curve is shifted rightward by an increase in government expenditure.

Accepted Answer

A) True 
 B)False

Question 15

The government expenditure multiplier is the magnified change in

Accepted Answer

A)  aggregate demand that results from a change in government expenditure on goods and services. 
B)  taxes as a result of a change in government expenditure. 
C)  government expenditure on goods and services as a result of a change in aggregate demand. 
D)  government expenditure as a result of to a change in taxes. 
A)  aggregate demand that results from a change in government expenditure on goods and services. 
B)  taxes as a result of a change in government expenditure. 
C)  government expenditure on goods and services as a result of a change in aggregate demand. 
D)  government expenditure as a result of to a change in taxes.

Question 16

The system that measures the lifetime tax burden and benefits of each generation is called

Accepted Answer

A)  actuarial accounting. 
B)  generational actuary. 
C)  actuarial genealogy. 
D)  generational accounting. 
A)  actuarial accounting. 
B)  generational actuary. 
C)  actuarial genealogy. 
D)  generational accounting.

Question 17

Federal government expenditures as a percentage of GDP are approximately

Accepted Answer

A)  66 percent. 
B)  20 percent. 
C)  50 percent. 
D)  10 percent. 
A)  66 percent. 
B)  20 percent. 
C)  50 percent. 
D)  10 percent.

Question 18

What is the difference between budget surplus, budget deficit and a balanced budget? Which of these three budget outcomes is currently the case in the United States?

Accepted Answer

A budget surplus occurs if tax revenues

Question 19

"As long as supply- side effects are ignored, the balanced budget multiplier is equal to zero." Is the previous statement correct or incorrect? Define the balanced budget multiplier and then explain your answer.

Accepted Answer

The statement is incorrect because, even

Question 20

The structural deficit is the deficit that occurs when

Accepted Answer

A)  short- run aggregate supply is greater than aggregate demand. 
B)  real GDP departs from potential GDP. 
C)  real GDP equals potential GDP. 
D)  aggregate demand is greater than short- run aggregate supply. 
A)  short- run aggregate supply is greater than aggregate demand. 
B)  real GDP departs from potential GDP. 
C)  real GDP equals potential GDP. 
D)  aggregate demand is greater than short- run aggregate supply.

During the Reagan administration in the 1980s, tax rates were and the budget deficit )

Which of the following is NOT a revenue source for the Federal government?

If tax receipts are greater than government outlays the government has a budget surplus.

An example of an automatic fiscal policy stabilizer is when

A report on the EU economic stimulus plan suggested that "... Governments must consider ... cutting VAT [value added tax] and labor taxes ..." The VAT is similar to a sales tax. If governments follow the suggestions, there will be according to the supply- side view.

What is the difference between discretionary fiscal policy and automatic stabilizers?

Splitting the fiscal imbalance between current and future generations is called

An increase in the income tax rate employment and _ potential GDP.

Which of the following is considered a purpose of the federal budget? I. To help the economy achieve full employment. II. To finance the activities of the federal government. III. To promote sustained economic growth.

Historically, the budget deficit has tended to

Income taxes in the United States are automatic stabilizers because

The aggregate demand curve is shifted rightward by an increase in government expenditure.

The government expenditure multiplier is the magnified change in

The system that measures the lifetime tax burden and benefits of each generation is called

Federal government expenditures as a percentage of GDP are approximately

What is the difference between budget surplus, budget deficit and a balanced budget? Which of these three budget outcomes is currently the case in the United States?

"As long as supply- side effects are ignored, the balanced budget multiplier is equal to zero." Is the previous statement correct or incorrect? Define the balanced budget multiplier and then explain your answer.

The structural deficit is the deficit that occurs when

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

During the Reagan administration in the 1980s, tax rates were and the budget deficit )

Which of the following is NOT a revenue source for the Federal government?

If tax receipts are greater than government outlays the government has a budget surplus.

An example of an automatic fiscal policy stabilizer is when

A report on the EU economic stimulus plan suggested that "... Governments must consider ... cutting VAT [value added tax] and labor taxes ..." The VAT is similar to a sales tax. If governments follow the suggestions, there will be according to the supply- side view.

What is the difference between discretionary fiscal policy and automatic stabilizers?

Splitting the fiscal imbalance between current and future generations is called

An increase in the income tax rate employment and _ potential GDP.

Which of the following is considered a purpose of the federal budget? I. To help the economy achieve full employment. II. To finance the activities of the federal government. III. To promote sustained economic growth.

Historically, the budget deficit has tended to

Income taxes in the United States are automatic stabilizers because

The aggregate demand curve is shifted rightward by an increase in government expenditure.

The government expenditure multiplier is the magnified change in

The system that measures the lifetime tax burden and benefits of each generation is called

Federal government expenditures as a percentage of GDP are approximately

What is the difference between budget surplus, budget deficit and a balanced budget? Which of these three budget outcomes is currently the case in the United States?

"As long as supply- side effects are ignored, the balanced budget multiplier is equal to zero." Is the previous statement correct or incorrect? Define the balanced budget multiplier and then explain your answer.

The structural deficit is the deficit that occurs when

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