Question 1

-In the above figure, if the economy is initially at point B and government expenditure decreases, the economy will

Accepted Answer

A)  move to point C. 
B)  move to point D. 
C)  stay at point B. 
D)  move to point A. 
A)  move to point C. 
B)  move to point D. 
C)  stay at point B. 
D)  move to point A.

Question 2

What is the Laffer curve? Where on their Laffer curves are the United States, the United Kingdom and France located?

Accepted Answer

The Laffer curve is graphed with tax rev

Question 3

In 2008, Britain decided to cut its value added tax (VAT) to 15 percent from 17.5 percent. The VAT is similar to a sales tax. According to the supply- side view, this change will increase
i. the after- tax wage
ii. the incentive to work
iii. the supply of labor

Accepted Answer

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

Question 4

A government surplus is defined as

Accepted Answer

A)  interest payments on the federal government debt. 
B)  on- budget expenditures. 
C)  the government printing money to pay its bills. 
D)  an excess of government tax revenues relative to government outlays. 
A)  interest payments on the federal government debt. 
B)  on- budget expenditures. 
C)  the government printing money to pay its bills. 
D)  an excess of government tax revenues relative to government outlays.

Question 5

A structural deficit occurs when the government budget has a deficit

Accepted Answer

A)  even though real GDP is less than potential GDP. 
B)  that is nominal, as opposed to a real budget deficit. 
C)  even though real GDP is equal to potential GDP. 
D)  even though real GDP is greater than structural GDP. 
A)  even though real GDP is less than potential GDP. 
B)  that is nominal, as opposed to a real budget deficit. 
C)  even though real GDP is equal to potential GDP. 
D)  even though real GDP is greater than structural GDP.

Question 6

A fiscal action that is triggered by the state of the economy is called

Accepted Answer

A)  generational fiscal policy. 
B)  automatic fiscal policy. 
C)  discretionary fiscal policy. 
D)  the government expenditure multiplier. 
A)  generational fiscal policy. 
B)  automatic fiscal policy. 
C)  discretionary fiscal policy. 
D)  the government expenditure multiplier.

Question 7

A fiscal action that is initiated by an act of Congress is called

Accepted Answer

A)  automatic fiscal policy. 
B)  discretionary fiscal policy. 
C)  generational fiscal policy. 
D)  the government expenditure multiplier. 
A)  automatic fiscal policy. 
B)  discretionary fiscal policy. 
C)  generational fiscal policy. 
D)  the government expenditure multiplier.

Question 8

The use of discretionary fiscal policy to end a recession is limited because

Accepted Answer

A)  the real- world multiplier is too small to have an impact on real GDP. 
B)  the legislative process is slow. 
C)  potential GDP changes too rapidly. 
D)  in the real world, taxes are not induced. 
A)  the real- world multiplier is too small to have an impact on real GDP. 
B)  the legislative process is slow. 
C)  potential GDP changes too rapidly. 
D)  in the real world, taxes are not induced.

Question 9

Deliberate changes in government expenditures and taxes to influence GDP

Accepted Answer

A)  are discretionary fiscal policy. 
B)  operate without time lags. 
C)  are automatic stabilizers. 
D)  are enacted by the Council of Economic Advisers. 
A)  are discretionary fiscal policy. 
B)  operate without time lags. 
C)  are automatic stabilizers. 
D)  are enacted by the Council of Economic Advisers.

Question 10

A country reports that its government outlays total $1.8 trillion and its tax receipts total $1.6 trillion. Does the country have a budget surplus or deficit and what is the surplus or deficit?

Accepted Answer

The country has a bu

Question 11

If the federal government's tax revenues are greater than its outlays, then the federal budget has a

Accepted Answer

A)  balanced budget. 
B)  transfer payment. 
C)  deficit. 
D)  surplus. 
A)  balanced budget. 
B)  transfer payment. 
C)  deficit. 
D)  surplus.

Question 12

In terms of the budget process, place the following events in order for fiscal year 2009.
I. Congress approves the budget.
II. The president sends a budget to Congress.
III. Supplementary budget laws are passed.

Accepted Answer

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

Question 13

Suppose the government increases autonomous taxes. This change decreases

Accepted Answer

A)  disposable income, which decreases consumption expenditure and aggregate expenditure. 
B)  disposable income, which decreases aggregate supply. 
C)  government expenditure, which decreases aggregate expenditure. 
D)  consumption expenditure and spending on imports. The effect on aggregate expenditure depends on whether domestic spending or spending on imports decreases the most. 
A)  disposable income, which decreases consumption expenditure and aggregate expenditure. 
B)  disposable income, which decreases aggregate supply. 
C)  government expenditure, which decreases aggregate expenditure. 
D)  consumption expenditure and spending on imports. The effect on aggregate expenditure depends on whether domestic spending or spending on imports decreases the most.

Question 14

-What is the amount of the surplus or deficit incurred in year 2 by the government shown in the above table?

Accepted Answer

A)  $5 billion deficit 
B)  $250 billion surplus 
C)  $0 
D)  $5 billion surplus 
A)  $5 billion deficit 
B)  $250 billion surplus 
C)  $0 
D)  $5 billion surplus

Question 15

The government increases its expenditures. The steeper the SAS curve, the will be the increase in the price level and the will be the increase in real GDP.

Accepted Answer

A)  larger; smaller 
B)  smaller; smaller 
C)  smaller; larger 
D)  larger; larger 
A)  larger; smaller 
B)  smaller; smaller 
C)  smaller; larger 
D)  larger; larger

Question 16

In 2007, Germany increased the value added tax (VAT) on consumption from 16 percent to 19 percent. The supply- side view, this will .

Accepted Answer

A)  shift the labor supply curve to the right. 
B)  decrease the tax wedge and lower the incentive to work. 
C)  increase the incentive to work in order to pay the higher tax. 
D)  increase the tax wedge and lower the incentive to work. 
A)  shift the labor supply curve to the right. 
B)  decrease the tax wedge and lower the incentive to work. 
C)  increase the incentive to work in order to pay the higher tax. 
D)  increase the tax wedge and lower the incentive to work.

Question 17

Fiscal policy

Accepted Answer

A)  is enacted by the Federal Reserve. 
B)  involves changing interest rates. 
C)  involves changing the money supply. 
D)  involves changing taxes and government spending. 
A)  is enacted by the Federal Reserve. 
B)  involves changing interest rates. 
C)  involves changing the money supply. 
D)  involves changing taxes and government spending.

Question 18

When the economy is hit by spending fluctuations, the government can try to minimize the effects by

Accepted Answer

A)  changing government expenditures on services. 
B)  changing government expenditures on goods. 
C)  changing taxes. 
D)  all of the above 
A)  changing government expenditures on services. 
B)  changing government expenditures on goods. 
C)  changing taxes. 
D)  all of the above

Question 19

Which of the following are a limitation of fiscal policy?
I. There is a lag between recognizing that fiscal policy might be needed and when it actually takes
II. Economic forecasts might be incorrect.
III. Monetary policy might counter fiscal policy.

Accepted Answer

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

Question 20

The largest part of Federal government outlays is

Accepted Answer

A)  corporate income taxes. 
B)  debt interest. 
C)  government expenditure on goods and services. 
D)  transfer payments. 
A)  corporate income taxes. 
B)  debt interest. 
C)  government expenditure on goods and services. 
D)  transfer payments.

-In the above figure, if the economy is initially at point B and government expenditure decreases, the economy will

What is the Laffer curve? Where on their Laffer curves are the United States, the United Kingdom and France located?

In 2008, Britain decided to cut its value added tax (VAT) to 15 percent from 17.5 percent. The VAT is similar to a sales tax. According to the supply- side view, this change will increase i. the after- tax wage ii. the incentive to work iii. the supply of labor

A government surplus is defined as

A structural deficit occurs when the government budget has a deficit

A fiscal action that is triggered by the state of the economy is called

A fiscal action that is initiated by an act of Congress is called

The use of discretionary fiscal policy to end a recession is limited because

Deliberate changes in government expenditures and taxes to influence GDP

A country reports that its government outlays total $1.8 trillion and its tax receipts total $1.6 trillion. Does the country have a budget surplus or deficit and what is the surplus or deficit?

If the federal government's tax revenues are greater than its outlays, then the federal budget has a

In terms of the budget process, place the following events in order for fiscal year 2009. I. Congress approves the budget. II. The president sends a budget to Congress. III. Supplementary budget laws are passed.

Suppose the government increases autonomous taxes. This change decreases

-What is the amount of the surplus or deficit incurred in year 2 by the government shown in the above table?

The government increases its expenditures. The steeper the SAS curve, the will be the increase in the price level and the will be the increase in real GDP.

In 2007, Germany increased the value added tax (VAT) on consumption from 16 percent to 19 percent. The supply- side view, this will .

Fiscal policy

When the economy is hit by spending fluctuations, the government can try to minimize the effects by

Which of the following are a limitation of fiscal policy? I. There is a lag between recognizing that fiscal policy might be needed and when it actually takes II. Economic forecasts might be incorrect. III. Monetary policy might counter fiscal policy.

The largest part of Federal government outlays is

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

-In the above figure, if the economy is initially at point B and government expenditure decreases, the economy will

What is the Laffer curve? Where on their Laffer curves are the United States, the United Kingdom and France located?

In 2008, Britain decided to cut its value added tax (VAT) to 15 percent from 17.5 percent. The VAT is similar to a sales tax. According to the supply- side view, this change will increase i. the after- tax wage ii. the incentive to work iii. the supply of labor

A government surplus is defined as

A structural deficit occurs when the government budget has a deficit

A fiscal action that is triggered by the state of the economy is called

A fiscal action that is initiated by an act of Congress is called

The use of discretionary fiscal policy to end a recession is limited because

Deliberate changes in government expenditures and taxes to influence GDP

A country reports that its government outlays total $1.8 trillion and its tax receipts total $1.6 trillion. Does the country have a budget surplus or deficit and what is the surplus or deficit?

If the federal government's tax revenues are greater than its outlays, then the federal budget has a

In terms of the budget process, place the following events in order for fiscal year 2009. I. Congress approves the budget. II. The president sends a budget to Congress. III. Supplementary budget laws are passed.

Suppose the government increases autonomous taxes. This change decreases

-What is the amount of the surplus or deficit incurred in year 2 by the government shown in the above table?

The government increases its expenditures. The steeper the SAS curve, the will be the increase in the price level and the will be the increase in real GDP.

In 2007, Germany increased the value added tax (VAT) on consumption from 16 percent to 19 percent. The supply- side view, this will .

Fiscal policy

When the economy is hit by spending fluctuations, the government can try to minimize the effects by

Which of the following are a limitation of fiscal policy? I. There is a lag between recognizing that fiscal policy might be needed and when it actually takes II. Economic forecasts might be incorrect. III. Monetary policy might counter fiscal policy.

The largest part of Federal government outlays is

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