Question 1

A constitutional balanced budget amendment would

Accepted Answer

A)  require that federal expenditures equal revenues (excluding borrowing). 
B)  divide the federal budget into a capital budget and an operating budget. 
C)  require a majority vote of Congress to authorize spending increases. 
D)  require that the federal government maintain a balanced operating budget only. 
A)  require that federal expenditures equal revenues (excluding borrowing). 
B)  divide the federal budget into a capital budget and an operating budget. 
C)  require a majority vote of Congress to authorize spending increases. 
D)  require that the federal government maintain a balanced operating budget only.

Question 2

The standard way to measure the effect of debt in an economy is the stock of debt relative to the GDP.

Accepted Answer

A) True 
 B)False

Question 3

Suppose the government's initial debt is $350 billion and that during the next two years the government runs deficits of $90 and $40 billion. If during the third year the government has a $70 billion surplus, the government's additional debt at the end of the three years will be

Accepted Answer

A)  $60 billion. 
B)  $200 billion. 
C)  $410 billion. 
D)  $550 billion. 
A)  $60 billion. 
B)  $200 billion. 
C)  $410 billion. 
D)  $550 billion.

Question 4

The burdens of the national debt generally fall on

Accepted Answer

A)  past generations. 
B)  the present generation. 
C)  future generations. 
D)  all of the above. 
A)  past generations. 
B)  the present generation. 
C)  future generations. 
D)  all of the above.

Question 5

In the year ________, for the first time in 30 years, the federal government ran a surplus.

Accepted Answer

A)  1980 
B)  1985 
C)  1990 
D)  1998 
A)  1980 
B)  1985 
C)  1990 
D)  1998

Question 6

What kind of investment instrument is an IRA, and when is the income earned from an IRA taxed?

Accepted Answer

An IRA is a savings account wh

Question 7

Using sharp increases or decreases in taxes rather than deficits is a better way to prevent distortions in an economy.

Accepted Answer

A) True 
 B)False

Question 8

Corporate income is taxed twice.

Accepted Answer

A) True 
 B)False

Question 9

Those who favor smaller government tend to do what in order to make it more difficult for politicians to increase government spending? List at least two methods.

Accepted Answer

cut taxes,

Question 10

To help pull an economy out of a recession and put additional income in the hands of the public, a government can force its expenditures to ________ its revenues and create a ________.

Accepted Answer

A)  reduce; deficit 
B)  exceed; deficit 
C)  stimulate; depression 
D)  exceed; special taxes 
A)  reduce; deficit 
B)  exceed; deficit 
C)  stimulate; depression 
D)  exceed; special taxes

Question 11

Suppose the government has a $440 billion budget deficit. If the government borrows $330 billion to finance this deficit and finances the rest by printing money, the amount of new money created will be

Accepted Answer

A)  $90 billion. 
B)  $110 billion. 
C)  $440 billion. 
D)  $770 billion. 
A)  $90 billion. 
B)  $110 billion. 
C)  $440 billion. 
D)  $770 billion.

Question 12

Income and revenue from taxes have a specific relationship during recessions. What is it?

Accepted Answer

A)  incomes rise, tax revenue decreases 
B)  incomes rise, tax revenue increases 
C)  incomes fall, tax revenue increases 
D)  incomes fall, tax revenue decreases 
A)  incomes rise, tax revenue decreases 
B)  incomes rise, tax revenue increases 
C)  incomes fall, tax revenue increases 
D)  incomes fall, tax revenue decreases

Question 13

The U.S. saving rate is

Accepted Answer

A)  higher than that of most major countries. 
B)  low. 
C)  rapidly increasing. 
D)  negative. 
A)  higher than that of most major countries. 
B)  low. 
C)  rapidly increasing. 
D)  negative.

Question 14

An example of a consumption tax is

Accepted Answer

A)  sales tax. 
B)  Social Security tax. 
C)  an income tax. 
D)  transfer payments. 
A)  sales tax. 
B)  Social Security tax. 
C)  an income tax. 
D)  transfer payments.

Question 15

A large government debt can reduce the amount of ________ in an economy and reduce future income and real wages for citizens.

Accepted Answer

A)  employment 
B)  capital 
C)  government spending 
D)  social benefit programs 
A)  employment 
B)  capital 
C)  government spending 
D)  social benefit programs

Question 16

When the deficit increases under the concept of Ricardian Equivalence, what happens to savings in the private sector?

Accepted Answer

A)  nothing 
B)  savings decrease 
C)  savings increase 
D)  savers hedge on purchases 
A)  nothing 
B)  savings decrease 
C)  savings increase 
D)  savers hedge on purchases

Question 17

Transfer payments include

Accepted Answer

A)  Social Security. 
B)  dividends. 
C)  consumption taxes. 
D)  open market sales. 
A)  Social Security. 
B)  dividends. 
C)  consumption taxes. 
D)  open market sales.

Question 18

Recall the Application about why the U.S. federal government took over the debt of the state governments in the late 1700s to answer the following question(s).
-According to this Application, the federal government's assuming the debts of the state governments that had been incurred during the Revolutionary War was seen as a way to

Accepted Answer

A)  force states to be dependant on the federal government. 
B)  strengthen the federal government. 
C)  prevent rapid inflation. 
D)  balance the federal budget. 
A)  force states to be dependant on the federal government. 
B)  strengthen the federal government. 
C)  prevent rapid inflation. 
D)  balance the federal budget.

Question 19

A consumption tax system is likely to benefit

Accepted Answer

A)  higher income individuals. 
B)  lower income individuals. 
C)  an individual who, regardless of income, is a large consumer. 
D)  corporations. 
A)  higher income individuals. 
B)  lower income individuals. 
C)  an individual who, regardless of income, is a large consumer. 
D)  corporations.

Question 20

The government debt is defined as

Accepted Answer

A)  the excess of total expenditures over total revenues. 
B)  the excess of total revenues over total expenditures. 
C)  government spending on goods and services plus transfer payments. 
D)  the sum of all past deficits and surpluses. 
A)  the excess of total expenditures over total revenues. 
B)  the excess of total revenues over total expenditures. 
C)  government spending on goods and services plus transfer payments. 
D)  the sum of all past deficits and surpluses.

A constitutional balanced budget amendment would

The standard way to measure the effect of debt in an economy is the stock of debt relative to the GDP.

Suppose the government's initial debt is $350 billion and that during the next two years the government runs deficits of $90 and $40 billion. If during the third year the government has a $70 billion surplus, the government's additional debt at the end of the three years will be

The burdens of the national debt generally fall on

In the year ________, for the first time in 30 years, the federal government ran a surplus.

What kind of investment instrument is an IRA, and when is the income earned from an IRA taxed?

Using sharp increases or decreases in taxes rather than deficits is a better way to prevent distortions in an economy.

Corporate income is taxed twice.

Those who favor smaller government tend to do what in order to make it more difficult for politicians to increase government spending? List at least two methods.

To help pull an economy out of a recession and put additional income in the hands of the public, a government can force its expenditures to its revenues and create a .

Suppose the government has a $440 billion budget deficit. If the government borrows $330 billion to finance this deficit and finances the rest by printing money, the amount of new money created will be

Income and revenue from taxes have a specific relationship during recessions. What is it?

The U.S. saving rate is

An example of a consumption tax is

A large government debt can reduce the amount of ________ in an economy and reduce future income and real wages for citizens.

When the deficit increases under the concept of Ricardian Equivalence, what happens to savings in the private sector?

Transfer payments include

A consumption tax system is likely to benefit

The government debt is defined as

Introduction: What Is Economics?

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Measuring a Nation's 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

A constitutional balanced budget amendment would

The standard way to measure the effect of debt in an economy is the stock of debt relative to the GDP.

Suppose the government's initial debt is $350 billion and that during the next two years the government runs deficits of $90 and $40 billion. If during the third year the government has a $70 billion surplus, the government's additional debt at the end of the three years will be

The burdens of the national debt generally fall on

In the year ________, for the first time in 30 years, the federal government ran a surplus.

What kind of investment instrument is an IRA, and when is the income earned from an IRA taxed?

Using sharp increases or decreases in taxes rather than deficits is a better way to prevent distortions in an economy.

Corporate income is taxed twice.

Those who favor smaller government tend to do what in order to make it more difficult for politicians to increase government spending? List at least two methods.

To help pull an economy out of a recession and put additional income in the hands of the public, a government can force its expenditures to ________ its revenues and create a ________.

Suppose the government has a $440 billion budget deficit. If the government borrows $330 billion to finance this deficit and finances the rest by printing money, the amount of new money created will be

Income and revenue from taxes have a specific relationship during recessions. What is it?

The U.S. saving rate is

An example of a consumption tax is

A large government debt can reduce the amount of ________ in an economy and reduce future income and real wages for citizens.

When the deficit increases under the concept of Ricardian Equivalence, what happens to savings in the private sector?

Transfer payments include

A consumption tax system is likely to benefit

The government debt is defined as

Introduction: What Is Economics?

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Measuring a Nation's 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

To help pull an economy out of a recession and put additional income in the hands of the public, a government can force its expenditures to its revenues and create a .