Question 1

If taxes exactly equaled government outlays the

Accepted Answer

A)  budget deficit would not change. 
B)  budget deficit would be zero. 
C)  federal government debt would decrease. 
D)  federal government debt would be zero. 
A)  budget deficit would not change. 
B)  budget deficit would be zero. 
C)  federal government debt would decrease. 
D)  federal government debt would be zero.

Question 2

The U.S. governmentʹs budget

Accepted Answer

A)  has mostly been in surplus during the past 30 years. 
B)  has always been in deficit during the past 30 years. 
C)  has mostly been in deficit during the past 30 years. 
D)  must be balanced each year. 
A)  has mostly been in surplus during the past 30 years. 
B)  has always been in deficit during the past 30 years. 
C)  has mostly been in deficit during the past 30 years. 
D)  must be balanced each year.

Question 3

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

Accepted Answer

The statement is incorrect bec

Question 4

In response to the 2008 recession, New Zealandʹs Finance Minister Bill English stated that ʺ... the 7 billion New Zealand dollars would be allocated to new infrastructure spending, providing financial aid to workers hit by layoffs as the economy slows and includes tax cuts planned for April.ʺ
New Zealandʹs 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)  AD curve rightward; impact lag 
B)  AD curve rightward; recognition lag 
C)  LAS curve leftward; impact lag. 
D)  SAS curve rightward; law-making lag 
A)  AD curve rightward; impact lag 
B)  AD curve rightward; recognition lag 
C)  LAS curve leftward; impact lag. 
D)  SAS curve rightward; law-making lag

Question 5

To eliminate the fiscal imbalance the government could

Accepted Answer

A)  lower benefits and lower tax revenues. 
B)  increase benefits and lower tax revenues. 
C)  increase benefits and increase tax revenues. 
D)  lower benefits and increase tax revenues. 
A)  lower benefits and lower tax revenues. 
B)  increase benefits and lower tax revenues. 
C)  increase benefits and increase tax revenues. 
D)  lower benefits and increase tax revenues.

Question 6

The supply side effects of a cut in tax rates include _________in the supply of labor and_________ in the supply of loanable funds.

Accepted Answer

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

Question 7

Income taxes in the United States are part of automatic fiscal policy 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 8

ʺEuropean Economic Recovery Planʺ
ʺThe European Commission urged EU governments to jointly combat the economic slowdown with 200 billion euros $256 billion) in spending and tax cuts to boost growth and consumer and business confidence.ʺ The plan ʺ...would see the 27 EU governments spend 1.5 percent of the blocʹs gross domestic product to halt the slowdown that has already pushed some European nations into recession.
Which of the following describe the EUʹs plan?
i. It is discretionary fiscal policy
ii. It will generate a cyclical surplus.

Accepted Answer

A)  ii only. 
B)  i only. 
C)  i and ii. 
D)  neither i nor ii. 
A)  ii only. 
B)  i only. 
C)  i and ii. 
D)  neither i nor ii.

Question 9

A report on the EU economic stimulus plan suggested that ʺ... Governments must consider ... cutting VAT [value added tax] and labor taxes ...ʺ 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 increase in labor supply and a decrease in the tax wedge 
B)  an upward shift in the aggregate production function 
C)  an increase in saving and an increase in the tax wedge 
D)  an increase in the labor supply and an increase in the tax wedge 
A)  an increase in labor supply and a decrease in the tax wedge 
B)  an upward shift in the aggregate production function 
C)  an increase in saving and an increase in the tax wedge 
D)  an increase in the labor supply and an increase in the tax wedge

Question 10

Fiscal policy involves

Accepted Answer

A)  decreasing the role of the Federal Reserve in the everyday life of the economy. 
B)  the use of tax and money policies by government to influence the level of interest rates. 
C)  the use of tax and spending policies by the government. 
D)  the use of interest rates to influence the level of GDP. 
A)  decreasing the role of the Federal Reserve in the everyday life of the economy. 
B)  the use of tax and money policies by government to influence the level of interest rates. 
C)  the use of tax and spending policies by the government. 
D)  the use of interest rates to influence the level of GDP.

Question 11

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

Accepted Answer

A)  could either increase or decrease. 
B)  increases. 
C)  doesnʹt change. 
D)  decreases. 
A)  could either increase or decrease. 
B)  increases. 
C)  doesnʹt change. 
D)  decreases.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Suppose the government increases taxes. One effect of this change is that it decreases

Accepted Answer

A)  the size of the government expenditure multiplier. 
B)  disposable income, which decreases consumption expenditure and aggregate demand. 
C)  government expenditure, which decreases aggregate demand. 
D)  disposable income which then decreases aggregate supply. 
A)  the size of the government expenditure multiplier. 
B)  disposable income, which decreases consumption expenditure and aggregate demand. 
C)  government expenditure, which decreases aggregate demand. 
D)  disposable income which then decreases aggregate supply.

Question 14

If the government runs a deficit, the total amount of government debt is

Accepted Answer

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

Question 15

-In the above figure, if actual GDP = $15 trillion, there is a budget _________equal to _________.

Accepted Answer

A)  deficit; $0.2 trillion 
B)  surplus; $1.3 trillion 
C)  surplus; $0.2 trillion 
D)  deficit; $1.1 trillion 
A)  deficit; $0.2 trillion 
B)  surplus; $1.3 trillion 
C)  surplus; $0.2 trillion 
D)  deficit; $1.1 trillion

Question 16

Needs-tested spending _________during recessions and _________during expansions.

Accepted Answer

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

Question 17

All of the following are part of fiscal policy EXCEPT

Accepted Answer

A)  setting tax rates. 
B)  controlling the money supply. 
C)  choosing the size of the government deficit. 
D)  setting government spending. 
A)  setting tax rates. 
B)  controlling the money supply. 
C)  choosing the size of the government deficit. 
D)  setting government spending.

Question 18

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

Accepted Answer

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

Question 19

An increase in the income tax rate _________employment and_________ potential GDP.

Accepted Answer

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

Question 20

The use of the U.S. federal budget to help stabilize the economy grew in reaction to the__________ and is known as __________.

Accepted Answer

A)  stagflation of the 1970s; fiscal policy 
B)  Great Depression of the 1930s; monetary policy 
C)  Great Depression of the 1930s; fiscal policy 
D)  stagflation of the 1970s; government policy 
A)  stagflation of the 1970s; fiscal policy 
B)  Great Depression of the 1930s; monetary policy 
C)  Great Depression of the 1930s; fiscal policy 
D)  stagflation of the 1970s; government policy

If taxes exactly equaled government outlays the

The U.S. governmentʹs budget

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

To eliminate the fiscal imbalance the government could

The supply side effects of a cut in tax rates include _in the supply of labor and_ in the supply of loanable funds.

Income taxes in the United States are part of automatic fiscal policy because

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

Fiscal policy involves

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

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

Suppose the government increases taxes. One effect of this change is that it decreases

If the government runs a deficit, the total amount of government debt is

-In the above figure, if actual GDP = $15 trillion, there is a budget _equal to _.

Needs-tested spending _during recessions and _during expansions.

All of the following are part of fiscal policy EXCEPT

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

An increase in the income tax rate _employment and_ potential GDP.

The use of the U.S. federal budget to help stabilize the economy grew in reaction to the and is known as .

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: the Keynesian Model

U.S Inflation, Unemployment, and Business Cycle

Monetary Policy

International Trade Policy

Review

Filters

Exam 13: Fiscal Policy

If taxes exactly equaled government outlays the

The U.S. governmentʹs budget

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

To eliminate the fiscal imbalance the government could

The supply side effects of a cut in tax rates include _________in the supply of labor and_________ in the supply of loanable funds.

Income taxes in the United States are part of automatic fiscal policy because

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

Fiscal policy involves

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

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

Suppose the government increases taxes. One effect of this change is that it decreases

If the government runs a deficit, the total amount of government debt is

-In the above figure, if actual GDP = $15 trillion, there is a budget _________equal to _________.

Needs-tested spending _________during recessions and _________during expansions.

All of the following are part of fiscal policy EXCEPT

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

An increase in the income tax rate _________employment and_________ potential GDP.

The use of the U.S. federal budget to help stabilize the economy grew in reaction to the__________ and is known as __________.

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: the Keynesian Model

U.S Inflation, Unemployment, and Business Cycle

Monetary Policy

International Trade Policy

Review

Filters

The supply side effects of a cut in tax rates include _in the supply of labor and_ in the supply of loanable funds.

-In the above figure, if actual GDP = $15 trillion, there is a budget _equal to _.

Needs-tested spending _during recessions and _during expansions.

An increase in the income tax rate _employment and_ potential GDP.

The use of the U.S. federal budget to help stabilize the economy grew in reaction to the and is known as .