Question 1

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

Accepted Answer

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

Question 2

If employment exceeds full employment, what fiscal policy actions could eliminate the gap?

Accepted Answer

To restore the economy to full employmen

Question 3

The structural deficit is the deficit that occurs when

Accepted Answer

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

Question 4

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

Accepted Answer

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

Question 5

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

Accepted Answer

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

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

The budget deficit

Accepted Answer

A)  is the total outstanding borrowing by the government. 
B)  decreased during the Obama Administration. 
C)  is the difference between government outlays and tax revenues. 
D)  reached its peak in the year 2000. 
A)  is the total outstanding borrowing by the government. 
B)  decreased during the Obama Administration. 
C)  is the difference between government outlays and tax revenues. 
D)  reached its peak in the year 2000.

Question 8

Rank the following federal government outlays from the largest to the smallest.
I. debt interest
II. transfer payments
III. expenditure on goods and services

Accepted Answer

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

Question 9

-In the above figure, which fiscal policy could help move the economy to potential GDP?

Accepted Answer

A)  increasing government expenditure 
B)  decreasing government expenditure 
C)  decreasing autonomous taxes 
D)  Both answers A and B are correct. 
A)  increasing government expenditure 
B)  decreasing government expenditure 
C)  decreasing autonomous taxes 
D)  Both answers A and B are correct.

Question 10

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

Accepted Answer

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

Question 11

Tax revenues _________during recessions and _________during expansions.

Accepted Answer

A)  decrease; increase 
B)  increase; expansions 
C)  increase; increase 
D)  decrease; decrease 
A)  decrease; increase 
B)  increase; expansions 
C)  increase; increase 
D)  decrease; decrease

Question 12

What is the largest source of revenue for the federal government?

Accepted Answer

A)  sales tax 
B)  personal income taxes 
C)  corporate income taxes 
D)  Social Security taxes 
A)  sales tax 
B)  personal income taxes 
C)  corporate income taxes 
D)  Social Security taxes

Question 13

Which of the following government bodies does NOT participate directly in formulating U.S. fiscal policy?

Accepted Answer

A)  the Federal Reserve Board 
B)  the House of Representatives 
C)  the Senate 
D)  the President and his cabinet 
A)  the Federal Reserve Board 
B)  the House of Representatives 
C)  the Senate 
D)  the President and his cabinet

Question 14

A government that currently has a budget deficit can balance its budget by__________ .

Accepted Answer

A)  increasing tax revenues by more than it increases outlays 
B)  decreasing tax revenues by more than it decreases outlays 
C)  increasing both tax revenues and outlays by the same amount 
D)  decreasing tax revenues by more than it increases outlays 
A)  increasing tax revenues by more than it increases outlays 
B)  decreasing tax revenues by more than it decreases outlays 
C)  increasing both tax revenues and outlays by the same amount 
D)  decreasing tax revenues by more than it increases outlays

Question 15

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

Question 16

The main goal of fiscal policy is to produce a balanced budget.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

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

Question 18

Changes in which of the following is included as part of fiscal policy?

Accepted Answer

A)  tax rates 
B)  the level of interest rates 
C)  monetary policy 
D)  the quantity of money 
A)  tax rates 
B)  the level of interest rates 
C)  monetary policy 
D)  the quantity of money

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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 4?

Accepted Answer

A)  $5 billion 
B)  $35 billion 
C)  $320 billion 
D)  -$20 billion The government has net saving rather than debt.) 
A)  $5 billion 
B)  $35 billion 
C)  $320 billion 
D)  -$20 billion The government has net saving rather than debt.)

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

If employment exceeds full employment, what fiscal policy actions could eliminate the gap?

The structural deficit is the deficit that occurs when

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

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

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

The budget deficit

Rank the following federal government outlays from the largest to the smallest. I. debt interest II. transfer payments III. expenditure on goods and services

-In the above figure, which fiscal policy could help move the economy to potential GDP?

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

Tax revenues _during recessions and _during expansions.

What is the largest source of revenue for the federal government?

Which of the following government bodies does NOT participate directly in formulating U.S. fiscal policy?

A government that currently has a budget deficit can balance its budget by__________ .

The main goal of fiscal policy is to produce a balanced budget.

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

Changes in which of the following is included as part of fiscal policy?

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

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 4?

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

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

If employment exceeds full employment, what fiscal policy actions could eliminate the gap?

The structural deficit is the deficit that occurs when

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

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

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

The budget deficit

Rank the following federal government outlays from the largest to the smallest. I. debt interest II. transfer payments III. expenditure on goods and services

-In the above figure, which fiscal policy could help move the economy to potential GDP?

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

Tax revenues _________during recessions and _________during expansions.

What is the largest source of revenue for the federal government?

Which of the following government bodies does NOT participate directly in formulating U.S. fiscal policy?

A government that currently has a budget deficit can balance its budget by__________ .

The main goal of fiscal policy is to produce a balanced budget.

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

Changes in which of the following is included as part of fiscal policy?

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

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 4?

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

Tax revenues _during recessions and _during expansions.