Question 1

Critics of a balanced- budget amendment believe that a balanced budget would not allow the government enough flexibility to:

Accepted Answer

A)  fight inflation. 
B)  get the economy out of recessions. 
C)  raise wages for civil servants. 
D)  spend budget surpluses. 
A)  fight inflation. 
B)  get the economy out of recessions. 
C)  raise wages for civil servants. 
D)  spend budget surpluses.

Question 2

IRA, 401(k), 403(b), and Keogh plans:

Accepted Answer

A)  encourage saving while limiting tax liabilities. 
B)  place no limits on the amount that individuals can deposit in these accounts. 
C)  impose added taxes on those who save. 
D)  are never taxed. 
A)  encourage saving while limiting tax liabilities. 
B)  place no limits on the amount that individuals can deposit in these accounts. 
C)  impose added taxes on those who save. 
D)  are never taxed.

Question 3

The reason why the budget deficit increases during recessions is:

Accepted Answer

A)  higher tax revenues. 
B)  higher welfare payments. 
C)  lower tax rates. 
D)  Both A and C are correct. 
A)  higher tax revenues. 
B)  higher welfare payments. 
C)  lower tax rates. 
D)  Both A and C are correct.

Question 4

During a recession, automatic stabilizers cause the federal budget deficit to:

Accepted Answer

A)  remain unchanged. 
B)  decrease. 
C)  either increase or decrease. 
D)  increase. 
A)  remain unchanged. 
B)  decrease. 
C)  either increase or decrease. 
D)  increase.

Question 5

Explain automatic stabilizers and their impact on the economy.

Accepted Answer

Automatic stabilizers represent automati

Question 6

An increase in government spending and a decrease in taxes will cause the:

Accepted Answer

A)  budget deficit to remain unchanged. 
B)  budget deficit to increase. 
C)  budget deficit to decrease. 
D)  budget deficit to increase slightly. 
A)  budget deficit to remain unchanged. 
B)  budget deficit to increase. 
C)  budget deficit to decrease. 
D)  budget deficit to increase slightly.

Question 7

If the government were to experience a budget surplus in the next three years, the government's total debt would:

Accepted Answer

A)  stay the same over the next three years. 
B)  decrease over the next three years. 
C)  increase over the next three years. 
D)  would decrease only on the third year. 
A)  stay the same over the next three years. 
B)  decrease over the next three years. 
C)  increase over the next three years. 
D)  would decrease only on the third year.

Question 8

What are some of the features of Robert Hall and Alvin Rabushka's flat tax?

Accepted Answer

Hall and Rabushka's flat tax features a

Question 9

Recall Application 1, "New Methods to Measure the Long-Term Fiscal Imbalances for the United States," to answer the
following questions:
-According to the application, the "fiscal imbalance" in 2003 was larger than the imbalance during World War II.

Accepted Answer

A) True 
 B)False

Question 10

Explain how a budget deficit can lead to inflation.

Accepted Answer

The government can create infl

Question 11

Recall Application 1, "New Methods to Measure the Long-Term Fiscal Imbalances for the United States," to answer the
following questions:
-According to the application, a way to eliminate the fiscal imbalance is to:

Accepted Answer

A)  scale back benefits. 
B)  double payroll taxes. 
C)  double income taxes. 
D)  all of the above are correct. 
A)  scale back benefits. 
B)  double payroll taxes. 
C)  double income taxes. 
D)  all of the above are correct.

Question 12

A higher rate of return to saving has:

Accepted Answer

A)  income and substitution effects that both increase saving. 
B)  an income effect that discourages saving and a substitution effect that encourages saving. 
C)  an income effect that encourages saving and a substitution effect that discourages saving. 
D)  income and substitution effects that both decrease saving. 
A)  income and substitution effects that both increase saving. 
B)  an income effect that discourages saving and a substitution effect that encourages saving. 
C)  an income effect that encourages saving and a substitution effect that discourages saving. 
D)  income and substitution effects that both decrease saving.

Question 13

Recall Application 2, "Would a Policy Rule Have Prevented the Housing Boom? ," to answer the following questions:
-According to the application, which of the following European countries deviated the most from the "Taylor rule" and suffered the worst boom and bust in housing?

Accepted Answer

A)  Germany 
B)  Spain 
C)  the United Kingdom 
D)  France 
A)  Germany 
B)  Spain 
C)  the United Kingdom 
D)  France

Question 14

Which of the following countries have central banks that explicitly target inflation?

Accepted Answer

A)  Canada 
B)  the United States 
C)  the United Kingdom 
D)  Australia 
A)  Canada 
B)  the United States 
C)  the United Kingdom 
D)  Australia

Question 15

The U.S. tax system discourages savings because:

Accepted Answer

A)  taxpayers pay a value- added tax on their savings. 
B)  taxpayers pay taxes on both their wages and on the earnings from their savings. 
C)  taxpayers pay taxes only on their wages. 
D)  taxpayers pay a federal tax on their consumption spending. 
A)  taxpayers pay a value- added tax on their savings. 
B)  taxpayers pay taxes on both their wages and on the earnings from their savings. 
C)  taxpayers pay taxes only on their wages. 
D)  taxpayers pay a federal tax on their consumption spending.

Question 16

How does Hall and Rabushka's flat tax make sure that the very wealthy pay taxes?

Accepted Answer

Hall and Rabushka's flat tax r

Question 17

Explain the reasons why the US had a budget surplus in the late 1990s.

Accepted Answer

The budget surpluses in the late 1990s w

Question 18

If what a government spends exceeds what it collects in taxes in a year, then the government is experiencing a:

Accepted Answer

A)  government net revenue. 
B)  government budget surplus. 
C)  government budget deficit. 
D)  government net expenditure. 
A)  government net revenue. 
B)  government budget surplus. 
C)  government budget deficit. 
D)  government net expenditure.

Question 19

A decrease in government spending and an increase in taxes will cause the:

Accepted Answer

A)  government debt to increase. 
B)  budget deficit to increase. 
C)  budget deficit to remain unchanged. 
D)  budget deficit to decrease. 
A)  government debt to increase. 
B)  budget deficit to increase. 
C)  budget deficit to remain unchanged. 
D)  budget deficit to decrease.

Question 20

Typically, in the United States, the ratio of debt to GDP has risen during times of war.

Accepted Answer

A) True 
 B)False

Critics of a balanced- budget amendment believe that a balanced budget would not allow the government enough flexibility to:

IRA, 401(k), 403(b), and Keogh plans:

The reason why the budget deficit increases during recessions is:

During a recession, automatic stabilizers cause the federal budget deficit to:

Explain automatic stabilizers and their impact on the economy.

An increase in government spending and a decrease in taxes will cause the:

If the government were to experience a budget surplus in the next three years, the government's total debt would:

What are some of the features of Robert Hall and Alvin Rabushka's flat tax?

Recall Application 1, "New Methods to Measure the Long-Term Fiscal Imbalances for the United States," to answer the following questions: -According to the application, the "fiscal imbalance" in 2003 was larger than the imbalance during World War II.

Explain how a budget deficit can lead to inflation.

Recall Application 1, "New Methods to Measure the Long-Term Fiscal Imbalances for the United States," to answer the following questions: -According to the application, a way to eliminate the fiscal imbalance is to:

A higher rate of return to saving has:

Recall Application 2, "Would a Policy Rule Have Prevented the Housing Boom? ," to answer the following questions: -According to the application, which of the following European countries deviated the most from the "Taylor rule" and suffered the worst boom and bust in housing?

Which of the following countries have central banks that explicitly target inflation?

The U.S. tax system discourages savings because:

How does Hall and Rabushka's flat tax make sure that the very wealthy pay taxes?

Explain the reasons why the US had a budget surplus in the late 1990s.

If what a government spends exceeds what it collects in taxes in a year, then the government is experiencing a:

A decrease in government spending and an increase in taxes will cause the:

Typically, in the United States, the ratio of debt to GDP has risen during times of war.

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Measuring a Nations Production and Income

Unemployment and Inflation

The Economy at Full Employment

Why Do Economies Grow

Aggregate Demand and Aggregate Supply

Fiscal Policy

The Income-Expenditure Model

Investment and Financial Markets

Money and the Banking System

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

The Dynamics of Inflation and Unemployment

International Trade and Public Policy

The World of International Finance

Filters

Exam 17: Macroeconomic Policy Debates

Critics of a balanced- budget amendment believe that a balanced budget would not allow the government enough flexibility to:

IRA, 401(k), 403(b), and Keogh plans:

The reason why the budget deficit increases during recessions is:

During a recession, automatic stabilizers cause the federal budget deficit to:

Explain automatic stabilizers and their impact on the economy.

An increase in government spending and a decrease in taxes will cause the:

If the government were to experience a budget surplus in the next three years, the government's total debt would:

What are some of the features of Robert Hall and Alvin Rabushka's flat tax?

Recall Application 1, "New Methods to Measure the Long-Term Fiscal Imbalances for the United States," to answer the following questions: -According to the application, the "fiscal imbalance" in 2003 was larger than the imbalance during World War II.

Explain how a budget deficit can lead to inflation.

Recall Application 1, "New Methods to Measure the Long-Term Fiscal Imbalances for the United States," to answer the following questions: -According to the application, a way to eliminate the fiscal imbalance is to:

A higher rate of return to saving has:

Recall Application 2, "Would a Policy Rule Have Prevented the Housing Boom? ," to answer the following questions: -According to the application, which of the following European countries deviated the most from the "Taylor rule" and suffered the worst boom and bust in housing?

Which of the following countries have central banks that explicitly target inflation?

The U.S. tax system discourages savings because:

How does Hall and Rabushka's flat tax make sure that the very wealthy pay taxes?

Explain the reasons why the US had a budget surplus in the late 1990s.

If what a government spends exceeds what it collects in taxes in a year, then the government is experiencing a:

A decrease in government spending and an increase in taxes will cause the:

Typically, in the United States, the ratio of debt to GDP has risen during times of war.

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Measuring a Nations Production and Income

Unemployment and Inflation

The Economy at Full Employment

Why Do Economies Grow

Aggregate Demand and Aggregate Supply

Fiscal Policy

The Income-Expenditure Model

Investment and Financial Markets

Money and the Banking System

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

The Dynamics of Inflation and Unemployment

International Trade and Public Policy

The World of International Finance

Filters