Question 1

All of the following are government outlays EXCEPT

Accepted Answer

A)  transfer payments. 
B)  expenditure on goods and services. 
C)  purchases of corporate bonds. 
D)  interest on the government's debt. 
A)  transfer payments. 
B)  expenditure on goods and services. 
C)  purchases of corporate bonds. 
D)  interest on the government's debt.

Question 2

An example of a fiscal policy designed to increase real GDP is

Accepted Answer

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

Question 3

Which of the following is included as part of fiscal policy?

Accepted Answer

A)  the level of interest rates 
B)  money supply 
C)  the level of government spending 
D)  monetary policy 
A)  the level of interest rates 
B)  money supply 
C)  the level of government spending 
D)  monetary policy

Question 4

An increase in government expenditure shifts the AD curve and an increase in taxes shifts the AD curve .

Accepted Answer

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

Question 5

What is the effect on aggregate demand and the AD curve from either an increase in government expenditure or a cut in taxes?

Accepted Answer

Both an increase in government

Question 6

Which of the following is the largest source of federal government revenue?

Accepted Answer

A)  corporate income taxes 
B)  personal income taxes 
C)  Social Security taxes 
D)  borrowing 
A)  corporate income taxes 
B)  personal income taxes 
C)  Social Security taxes 
D)  borrowing

Question 7

Define the balanced budget multiplier and explain how it works. In your answer, ignore any supply- side effects.

Accepted Answer

The balanced budget multiplier indicates

Question 8

Which of the following are true regarding state and local government spending?
I. State and local government spending is used to stabilize the economy.
II. State and local government spending tends to increase during recessions.

Accepted Answer

A)  I only 
B)  II only 
C)  I and II 
D)  neither I nor II 
A)  I only 
B)  II only 
C)  I and II 
D)  neither I nor II

Question 9

In the short run, a contractionary fiscal policy decreases real GDP and lowers the price level.

Accepted Answer

A) True 
 B)False

Question 10

In response to the 2008 recession, New Zealand's Finance Minister Bill English stated that "... the 7 b New Zealand dollars would be allocated to new infrastructure spending, providing financial aid to hit by layoffs as the economy slows and includes tax cuts planned for April."
HYPERLINK "http://www.iht.com/" www.iht.com, 11/26/20
New Zealand's government expects the policies to shift the but at this point in time the
Might weaken its ability to affect real GDP.

Accepted Answer

A)  SAS curve rightward; law- making lag 
B)  AD curve rightward; recognition lag 
C)  LAS curve leftward; impact lag. 
D)  AD curve rightward; impact lag 
A)  SAS curve rightward; law- making lag 
B)  AD curve rightward; recognition lag 
C)  LAS curve leftward; impact lag. 
D)  AD curve rightward; impact lag

Question 11

When an economy is above full employment and the government has a budget deficit, that deficit
)

Accepted Answer

A)  is equal to the cyclical deficit minus the structural deficit 
B)  is less than the structural deficit 
C)  is equal to the structural deficit minus the cyclical deficit 
D)  exceeds the structural deficit 
A)  is equal to the cyclical deficit minus the structural deficit 
B)  is less than the structural deficit 
C)  is equal to the structural deficit minus the cyclical deficit 
D)  exceeds the structural deficit

Question 12

Automatic stabilizers refer in part to

Accepted Answer

A)  the unemployment effects of recession. 
B)  deficit- reduction policies. 
C)  discretionary fiscal policies. 
D)  government spending actions that automatically dampen the business cycle. 
A)  the unemployment effects of recession. 
B)  deficit- reduction policies. 
C)  discretionary fiscal policies. 
D)  government spending actions that automatically dampen the business cycle.

Question 13

The Council of Economic Advisers have the following roles EXCEPT .

Accepted Answer

A)  proposing the federal government's budget to Congress 
B)  keeping the President informed about the current state of the economy 
C)  making forecasts of where the economy is heading 
D)  monitoring the U.S. economy 
A)  proposing the federal government's budget to Congress 
B)  keeping the President informed about the current state of the economy 
C)  making forecasts of where the economy is heading 
D)  monitoring the U.S. economy

Question 14

How has the federal government debt as a percentage of GDP changed over the last 40 years?

Accepted Answer

As a percentage of GDP, the federal gove

Question 15

"Between 2002 and 2007, U.S. GDP increased, which decreased induced taxes and increased needs- tested spending." Is the previous statement correct or incorrect? Explain your answer.

Accepted Answer

The statement is incorrect. It

Question 16

By definition, a government budget deficit is the situation that occurs when the

Accepted Answer

A)  government outlays exceed what it receives in taxes. 
B)  economy goes into a recession. 
C)  government spends money on things which do not produce revenue, such as schools. 
D)  government miscalculated how much it will receive in taxes. 
A)  government outlays exceed what it receives in taxes. 
B)  economy goes into a recession. 
C)  government spends money on things which do not produce revenue, such as schools. 
D)  government miscalculated how much it will receive in taxes.

Question 17

Because of automatic stabilizers, when GDP fluctuates the

Accepted Answer

A)  government's deficit fluctuates directly with GDP so that it is larger when GDP increases. 
B)  government's deficit fluctuates inversely with GDP so that it is larger when GDP decreases. 
C)  the economy will automatically go to full employment. 
D)  government's budget remains in balance. 
A)  government's deficit fluctuates directly with GDP so that it is larger when GDP increases. 
B)  government's deficit fluctuates inversely with GDP so that it is larger when GDP decreases. 
C)  the economy will automatically go to full employment. 
D)  government's budget remains in balance.

Question 18

What is fiscal policy and what are its purposes?

Accepted Answer

Fiscal policy is the use of th

Question 19

-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 increases its expenditure on goods and services. 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 B; remain constant; the same as 
C)  point D; rise; less than 
D)  point C; rise; less than 
A)  point A; fall; less than 
B)  point B; remain constant; the same as 
C)  point D; rise; less than 
D)  point C; rise; less than

Question 20

"More than 9,000 laid- off Nevada workers will qualify for a second 13- week round of extended unemployment benefits, under federal legislation signed by President Bush. [The] workers exhaust first 13 weeks of extended benefits and will now be eligible for the new benefits, which pay an avera
$293 a week. "
HYPERLINK "http://www.mercurynews.com/" www.mercurynews.com, 11/24/20
Unemployment benefits are considered part of _ fiscal policy. The extension of benefits wo
Fiscal policy.

Accepted Answer

A)  automatic; also be considered automatic 
B)  automatic; be discretionary 
C)  discretionary; also be considered discretionary 
D)  discretionary; be automatic 
A)  automatic; also be considered automatic 
B)  automatic; be discretionary 
C)  discretionary; also be considered discretionary 
D)  discretionary; be automatic

All of the following are government outlays EXCEPT

An example of a fiscal policy designed to increase real GDP is

Which of the following is included as part of fiscal policy?

An increase in government expenditure shifts the AD curve and an increase in taxes shifts the AD curve .

What is the effect on aggregate demand and the AD curve from either an increase in government expenditure or a cut in taxes?

Which of the following is the largest source of federal government revenue?

Define the balanced budget multiplier and explain how it works. In your answer, ignore any supply- side effects.

Which of the following are true regarding state and local government spending? I. State and local government spending is used to stabilize the economy. II. State and local government spending tends to increase during recessions.

In the short run, a contractionary fiscal policy decreases real GDP and lowers the price level.

When an economy is above full employment and the government has a budget deficit, that deficit )

Automatic stabilizers refer in part to

The Council of Economic Advisers have the following roles EXCEPT .

How has the federal government debt as a percentage of GDP changed over the last 40 years?

"Between 2002 and 2007, U.S. GDP increased, which decreased induced taxes and increased needs- tested spending." Is the previous statement correct or incorrect? Explain your answer.

By definition, a government budget deficit is the situation that occurs when the

Because of automatic stabilizers, when GDP fluctuates the

What is fiscal policy and what are its purposes?

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

All of the following are government outlays EXCEPT

An example of a fiscal policy designed to increase real GDP is

Which of the following is included as part of fiscal policy?

An increase in government expenditure shifts the AD curve and an increase in taxes shifts the AD curve .

What is the effect on aggregate demand and the AD curve from either an increase in government expenditure or a cut in taxes?

Which of the following is the largest source of federal government revenue?

Define the balanced budget multiplier and explain how it works. In your answer, ignore any supply- side effects.

Which of the following are true regarding state and local government spending? I. State and local government spending is used to stabilize the economy. II. State and local government spending tends to increase during recessions.

In the short run, a contractionary fiscal policy decreases real GDP and lowers the price level.

When an economy is above full employment and the government has a budget deficit, that deficit )

Automatic stabilizers refer in part to

The Council of Economic Advisers have the following roles EXCEPT .

How has the federal government debt as a percentage of GDP changed over the last 40 years?

"Between 2002 and 2007, U.S. GDP increased, which decreased induced taxes and increased needs- tested spending." Is the previous statement correct or incorrect? Explain your answer.

By definition, a government budget deficit is the situation that occurs when the

Because of automatic stabilizers, when GDP fluctuates the

What is fiscal policy and what are its purposes?

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