Question 1

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 2

Fiscal policy

Accepted Answer

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

Question 3

-The figure above shows tax revenues and government expenditures in the economy of Meadowlake. Potential GDP is $19 trillion. If real GDP is $17 trillion, then the government has a

Accepted Answer

A)  cyclical deficit. 
B)  structural deficit. 
C)  structural surplus. 
D)  cyclical surplus. 
A)  cyclical deficit. 
B)  structural deficit. 
C)  structural surplus. 
D)  cyclical surplus.

Question 4

Social Security benefits and expenditures on Medicare and Medicaid are classified as

Accepted Answer

A)  debt interest. 
B)  purchases of goods and services. 
C)  production of goods and services. 
D)  transfer payments. 
A)  debt interest. 
B)  purchases of goods and services. 
C)  production of goods and services. 
D)  transfer payments.

Question 5

The difference between the before-tax and after-tax rates is referred to as the

Accepted Answer

A)  tax plug. 
B)  deadweight gain. 
C)  tax wedge. 
D)  taxation penalty. 
A)  tax plug. 
B)  deadweight gain. 
C)  tax wedge. 
D)  taxation penalty.

Question 6

The largest component of the fiscal imbalance is

Accepted Answer

A)  Social Security. 
B)  Medicare. 
C)  defense spending. 
D)  none of the above. 
A)  Social Security. 
B)  Medicare. 
C)  defense spending. 
D)  none of the above.

Question 7

The structural surplus

Accepted Answer

A)  equals the actual surplus plus the cyclical surplus. 
B)  is the government budget surplus that would exist if the economy was at potential GDP. 
C)  is, by definition, equal to the negative of the cyclical deficit. 
D)  is legally required to be positive. 
A)  equals the actual surplus plus the cyclical surplus. 
B)  is the government budget surplus that would exist if the economy was at potential GDP. 
C)  is, by definition, equal to the negative of the cyclical deficit. 
D)  is legally required to be positive.

Question 8

A country reports that its government outlays total $1.8 trillion and its 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 9

A structural deficit occurs when the government budget has a deficit

Accepted Answer

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

Question 10

The tax rebates passed by Congress in 2008 to help move the economy more rapidly toward potential GDP are an example of

Accepted Answer

A)  automatic fiscal policy. 
B)  discretionary fiscal policy. 
C)  non-needs spending. 
D)  contractionary fiscal policy. 
A)  automatic fiscal policy. 
B)  discretionary fiscal policy. 
C)  non-needs spending. 
D)  contractionary fiscal policy.

Question 11

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

Question 12

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

Accepted Answer

A)  the incentive to work increases. 
B)  the supply of labor increases. 
C)  there will be an increase in potential GDP due to the increase tax revenue. 
D)  the after-tax wage rate falls. 
A)  the incentive to work increases. 
B)  the supply of labor increases. 
C)  there will be an increase in potential GDP due to the increase tax revenue. 
D)  the after-tax wage rate falls.

Question 13

In 2007, France's government had revenue of $1.287 trillion while expenditures totaled $1.356 trillion. GDP was $2.56 trillion. In 2007, the government budget balance was ________ and government debt ________.

Accepted Answer

A)  -$0.69 billion; increased 
B)  $1.27 trillion; increased 
C)  $0.69 billion; decreased 
D)  $1.02 trillion; decreased 
A)  -$0.69 billion; increased 
B)  $1.27 trillion; increased 
C)  $0.69 billion; decreased 
D)  $1.02 trillion; decreased

Question 14

-The table above shows the aggregate production function in the economy of Prescottia. The people of Prescottia pay no taxes and are willing to work 248 million hours a year for a real wage rate of $8 an hour, and for each dollar increase in the real wage, they are willing to work 4 million additional hours per year.
a) Draw the economy's aggregate production function.
   b) Prescottia's demand for labor schedule is in the table above. Draw Prescottia's demand for labor and supply of labor curves.
c) What are the economy's full-employment quantity of labor and real wage rate? What is the country's potential GDP?
d) Suppose that Prescottia's government introduces a 25 percent income tax. Using your graph, what happens to the demand for labor? What happens to the supply of labor? Explain.
e) After the tax is imposed, what happens to Prescottia's full-employment quantity of labor? What happens to Prescottia's potential GDP?

Accepted Answer

@#IMG-DLM& a) See the figure above. @#IMG-DLM& b) See the fi

Question 15

If tax receipts exactly equaled government outlays in a year, the federal government debt would be zero.

Accepted Answer

A) True 
 B)False

Question 16

An increase in the government ________ reduces the government's ________.

Accepted Answer

A)  budget deficit; debt 
B)  budget surplus; debt 
C)  debt; budget deficit 
D)  None of the above answers is correct. 
A)  budget deficit; debt 
B)  budget surplus; debt 
C)  debt; budget deficit 
D)  None of the above answers is correct.

Question 17

-What is the amount of the surplus or deficit incurred in year 3 by the government shown in the above table?

Accepted Answer

A)  $0 
B)  $5 billion surplus 
C)  $5 billion deficit 
D)  $260 billion surplus 
A)  $0 
B)  $5 billion surplus 
C)  $5 billion deficit 
D)  $260 billion surplus

Question 18

"More than 9,000 laid-off Nevada workers will qualify for a second 13-week round of extended unemployment benefits, under federal legislation signed by President Bush. [The] workers exhausted their first 13 weeks of extended benefits and will now be eligible for the new benefits, which pay an average of $293 a week." www.mercurynews.com 11/24/2008
Unemployment benefits are considered part of ________ fiscal policy. The extension of benefits would ________ fiscal policy.

Accepted Answer

A)  automatic; be discretionary 
B)  discretionary; be automatic 
C)  automatic; also be considered automatic 
D)  discretionary; also be considered discretionary 
A)  automatic; be discretionary 
B)  discretionary; be automatic 
C)  automatic; also be considered automatic 
D)  discretionary; also be considered discretionary

Question 19

In response to the economic crisis in 2008, President Merkel "highlighted in her speech what the German government has already done: a financial sector rescue package worth up to €500 billion, and a proposed stimulus package of tax breaks [on income] and spending measures aimed at triggering investments of up to €50 billion over the next two years." www.iht.com, 11/26/2008
Which parts of the stimulus plan will increase labor supply?

Accepted Answer

A)  financial sector rescue package 
B)  spending measures targeted at investment 
C)  tax breaks 
D)  all of the above 
A)  financial sector rescue package 
B)  spending measures targeted at investment 
C)  tax breaks 
D)  all of the above

Question 20

Tax revenues

Accepted Answer

A)  are autonomous. 
B)  are independent of real GDP. 
C)  vary with real GDP. 
D)  are fixed over time. 
A)  are autonomous. 
B)  are independent of real GDP. 
C)  vary with real GDP. 
D)  are fixed over time.

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

Fiscal policy

-The figure above shows tax revenues and government expenditures in the economy of Meadowlake. Potential GDP is $19 trillion. If real GDP is $17 trillion, then the government has a

Social Security benefits and expenditures on Medicare and Medicaid are classified as

The difference between the before-tax and after-tax rates is referred to as the

The largest component of the fiscal imbalance is

The structural surplus

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

A structural deficit occurs when the government budget has a deficit

The tax rebates passed by Congress in 2008 to help move the economy more rapidly toward potential GDP are an example of

A government that currently has a budget deficit can balance its budget by

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

In 2007, France's government had revenue of $1.287 trillion while expenditures totaled $1.356 trillion. GDP was $2.56 trillion. In 2007, the government budget balance was and government debt .

If tax receipts exactly equaled government outlays in a year, the federal government debt would be zero.

An increase in the government reduces the government's .

-What is the amount of the surplus or deficit incurred in year 3 by the government shown in the above table?

Tax revenues

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 Business Cycle, Inflation, and Deflation

Monetary Policy

International Trade Policy

Filters

Exam 13: Fiscal Policy

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

Fiscal policy

-The figure above shows tax revenues and government expenditures in the economy of Meadowlake. Potential GDP is $19 trillion. If real GDP is $17 trillion, then the government has a

Social Security benefits and expenditures on Medicare and Medicaid are classified as

The difference between the before-tax and after-tax rates is referred to as the

The largest component of the fiscal imbalance is

The structural surplus

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

A structural deficit occurs when the government budget has a deficit

The tax rebates passed by Congress in 2008 to help move the economy more rapidly toward potential GDP are an example of

A government that currently has a budget deficit can balance its budget by

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

In 2007, France's government had revenue of $1.287 trillion while expenditures totaled $1.356 trillion. GDP was $2.56 trillion. In 2007, the government budget balance was ________ and government debt ________.

If tax receipts exactly equaled government outlays in a year, the federal government debt would be zero.

An increase in the government ________ reduces the government's ________.

-What is the amount of the surplus or deficit incurred in year 3 by the government shown in the above table?

Tax revenues

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 Business Cycle, Inflation, and Deflation

Monetary Policy

International Trade Policy

Filters

In 2007, France's government had revenue of $1.287 trillion while expenditures totaled $1.356 trillion. GDP was $2.56 trillion. In 2007, the government budget balance was and government debt .

An increase in the government reduces the government's .