Question 1

Suppose the economy is at a short- run equilibrium with real GDP greater than potential GDP. Which of the following fiscal policies would decrease real GDP and the price level?

Accepted Answer

A)  an increase in government expenditure 
B)  an increase in taxes 
C)  a decrease in taxes 
D)  None of the above answers is correct. 
A)  an increase in government expenditure 
B)  an increase in taxes 
C)  a decrease in taxes 
D)  None of the above answers is correct.

Question 2

All developed countries have about the same ratio of the government surplus to GDP.

Accepted Answer

A) True 
 B)False

Question 3

-The figure above shows tax revenues and government expenditures in the economy of Meadowlake. Potential GDP is $10 trillion. If real GDP is $10 trillion, then the government has a
)

Accepted Answer

A)  cyclical deficit 
B)  balanced budget 
C)  structural surplus 
D)  cyclical surplus 
A)  cyclical deficit 
B)  balanced budget 
C)  structural surplus 
D)  cyclical surplus

Question 4

If the economy has a structural deficit of $25 billion and a cyclical deficit of $75, we can conclude that the current budget deficit is billion.

Accepted Answer

A)  $100 
B)  $25 
C)  $50 
D)  $75 
A)  $100 
B)  $25 
C)  $50 
D)  $75

Question 5

-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 less than full employment, the government has a

Accepted Answer

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

Question 6

A structural deficit is a deficit that exists _ .

Accepted Answer

A)  during a business cycle expansion 
B)  even if the economy is at full employment 
C)  only because real GDP is less than potential GDP 
D)  only during a recession 
A)  during a business cycle expansion 
B)  even if the economy is at full employment 
C)  only because real GDP is less than potential GDP 
D)  only during a recession

Question 7

The Employment Act of 1946 states that it is the responsibility of the federal government to

Accepted Answer

A)  maintain the inflation rate at below 10 percent per year. 
B)  promote economic equality. 
C)  promote full employment. 
D)  All of the above answers are correct. 
A)  maintain the inflation rate at below 10 percent per year. 
B)  promote economic equality. 
C)  promote full employment. 
D)  All of the above answers are correct.

Question 8

The present value of the government's commitments to pay benefits minus the present value of its tax revenues is called

Accepted Answer

A)  fiscal balance. 
B)  fiscal obligations. 
C)  fiscal imbalance. 
D)  calculated fiscal obligations. 
A)  fiscal balance. 
B)  fiscal obligations. 
C)  fiscal imbalance. 
D)  calculated fiscal obligations.

Question 9

-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 above full employment, the government has a

Accepted Answer

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

Question 10

-Consider the above table with data for a country's government budget. Government outlays for the economy equal _ billion.

Accepted Answer

A)  $1200 
B)  $1500 
C)  $1425 
D)  $1275 
A)  $1200 
B)  $1500 
C)  $1425 
D)  $1275

Question 11

The purpose of the Employment Act of 1946 was to

Accepted Answer

A)  set targets for the unemployment rate to be achieved by the president. 
B)  establish an unemployment compensation system. 
C)  set up the Federal Reserve System. 
D)  establish goals for the federal government that would promote maximum employment, purchasing power, and production. 
A)  set targets for the unemployment rate to be achieved by the president. 
B)  establish an unemployment compensation system. 
C)  set up the Federal Reserve System. 
D)  establish goals for the federal government that would promote maximum employment, purchasing power, and production.

Question 12

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 3?

Accepted Answer

A)  $260 billion 
B)  $20 billion 
C)  $5 billion 
D)  $15 billion 
A)  $260 billion 
B)  $20 billion 
C)  $5 billion 
D)  $15 billion

Question 13

If the government has a balanced budget, the total amount of government debt is

Accepted Answer

A)  increasing. 
B)  zero. 
C)  decreasing. 
D)  constant. 
A)  increasing. 
B)  zero. 
C)  decreasing. 
D)  constant.

Question 14

What does the Employment Act of 1946 specify? Why is it an important economic milestone?

Accepted Answer

The Employment Act of 1946 said that the

Question 15

Social Security benefits and expenditures on Medicare and Medicaid are classified as

Accepted Answer

A)  production of goods and services. 
B)  debt interest. 
C)  transfer payments. 
D)  purchases of goods and services. 
A)  production of goods and services. 
B)  debt interest. 
C)  transfer payments. 
D)  purchases of goods and services.

Question 16

Federal government expenditures as a percentage of GDP are currently equal to approximately 10 percent.

Accepted Answer

A) True 
 B)False

Question 17

The effect of a change in taxes is less than the same sized change in government expenditures because

Accepted Answer

A)  tax rates are the same regardless of income levels. 
B)  the amount by which taxes change is affected by the MPC. 
C)  changes in government expenditure do not directly affect consumption. 
D)  the amount by which consumption initially changes is the MPC times the tax change. 
A)  tax rates are the same regardless of income levels. 
B)  the amount by which taxes change is affected by the MPC. 
C)  changes in government expenditure do not directly affect consumption. 
D)  the amount by which consumption initially changes is the MPC times the tax change.

Question 18

A government incurs a budget deficit when

Accepted Answer

A)  exports are less than imports. 
B)  taxes are greater than government outlays. 
C)  exports are greater than imports. 
D)  taxes are less than government outlays. 
A)  exports are less than imports. 
B)  taxes are greater than government outlays. 
C)  exports are greater than imports. 
D)  taxes are less than government outlays.

Question 19

In the short run, an increase in government expenditure will
I. shift the aggregate demand curve rightward.
II. increase real GDP.
III. increase the government expenditure multiplier.
IV. increase the autonomous tax multiplier.

Accepted Answer

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

Question 20

All of the following components represent sources of government revenue EXCEPT

Accepted Answer

A)  transfer payments. 
B)  personal income taxes. 
C)  corporate income taxes. 
D)  Social Security taxes. 
A)  transfer payments. 
B)  personal income taxes. 
C)  corporate income taxes. 
D)  Social Security taxes.

Suppose the economy is at a short- run equilibrium with real GDP greater than potential GDP. Which of the following fiscal policies would decrease real GDP and the price level?

All developed countries have about the same ratio of the government surplus to GDP.

-The figure above shows tax revenues and government expenditures in the economy of Meadowlake. Potential GDP is $10 trillion. If real GDP is $10 trillion, then the government has a )

If the economy has a structural deficit of $25 billion and a cyclical deficit of $75, we can conclude that the current budget deficit is billion.

-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 less than full employment, the government has a

A structural deficit is a deficit that exists _ .

The Employment Act of 1946 states that it is the responsibility of the federal government to

The present value of the government's commitments to pay benefits minus the present value of its tax revenues is called

-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 above full employment, the government has a

-Consider the above table with data for a country's government budget. Government outlays for the economy equal _ billion.

The purpose of the Employment Act of 1946 was to

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 3?

If the government has a balanced budget, the total amount of government debt is

What does the Employment Act of 1946 specify? Why is it an important economic milestone?

Social Security benefits and expenditures on Medicare and Medicaid are classified as

Federal government expenditures as a percentage of GDP are currently equal to approximately 10 percent.

The effect of a change in taxes is less than the same sized change in government expenditures because

A government incurs a budget deficit when

In the short run, an increase in government expenditure will I. shift the aggregate demand curve rightward. II. increase real GDP. III. increase the government expenditure multiplier. IV. increase the autonomous tax multiplier.

All of the following components represent sources of government revenue EXCEPT

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

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Exam 13: Fiscal Policy

Suppose the economy is at a short- run equilibrium with real GDP greater than potential GDP. Which of the following fiscal policies would decrease real GDP and the price level?

All developed countries have about the same ratio of the government surplus to GDP.

-The figure above shows tax revenues and government expenditures in the economy of Meadowlake. Potential GDP is $10 trillion. If real GDP is $10 trillion, then the government has a )

If the economy has a structural deficit of $25 billion and a cyclical deficit of $75, we can conclude that the current budget deficit is billion.

-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 less than full employment, the government has a

A structural deficit is a deficit that exists _ .

The Employment Act of 1946 states that it is the responsibility of the federal government to

The present value of the government's commitments to pay benefits minus the present value of its tax revenues is called

-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 above full employment, the government has a

-Consider the above table with data for a country's government budget. Government outlays for the economy equal _ billion.

The purpose of the Employment Act of 1946 was to

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 3?

If the government has a balanced budget, the total amount of government debt is

What does the Employment Act of 1946 specify? Why is it an important economic milestone?

Social Security benefits and expenditures on Medicare and Medicaid are classified as

Federal government expenditures as a percentage of GDP are currently equal to approximately 10 percent.

The effect of a change in taxes is less than the same sized change in government expenditures because

A government incurs a budget deficit when

In the short run, an increase in government expenditure will I. shift the aggregate demand curve rightward. II. increase real GDP. III. increase the government expenditure multiplier. IV. increase the autonomous tax multiplier.

All of the following components represent sources of government revenue EXCEPT

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