Question 1

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 5?

Accepted Answer

A)  -$20 billion (The government has net saving rather than debt.) 
B)  $35 billion 
C)  $50 billion 
D)  $325 billion 
A)  -$20 billion (The government has net saving rather than debt.) 
B)  $35 billion 
C)  $50 billion 
D)  $325 billion

Question 2

The aggregate demand curve is shifted rightward by an increase in government expenditure.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

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

Question 5

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

Accepted Answer

To restore the economy to full employmen

Question 6

The budget deficit

Accepted Answer

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

Question 7

Suppose that the government decreases its expenditures on goods and services. Within the AS-AD model, the result will be ________ in real GDP and ________ in the price level.

Accepted Answer

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

Question 8

An increase in tax rates as a result of a new tax law passed by Congress is an example of

Accepted Answer

A)  discretionary fiscal policy. 
B)  increasing the government debt. 
C)  increasing the government deficit. 
D)  needs-tested taxing change. 
A)  discretionary fiscal policy. 
B)  increasing the government debt. 
C)  increasing the government deficit. 
D)  needs-tested taxing change.

Question 9

The largest item of government outlays is

Accepted Answer

A)  debt interest 
B)  transfer payments 
C)  expenditures on goods and services 
D)  debt reduction 
A)  debt interest 
B)  transfer payments 
C)  expenditures on goods and services 
D)  debt reduction

Question 10

Which of the following is NOT a government outlay?

Accepted Answer

A)  transfer payments 
B)  expenditure on goods and services 
C)  debt interest on the government's debt 
D)  purchases of foreign bonds 
A)  transfer payments 
B)  expenditure on goods and services 
C)  debt interest on the government's debt 
D)  purchases of foreign bonds

Question 11

During an expansion, tax revenues ________ and government transfer payments ________.

Accepted Answer

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

Question 12

What is the difference between discretionary fiscal policy and automatic fiscal policy?

Accepted Answer

Discretionary fiscal policy is a policy

Question 13

Deliberate changes in government expenditures and taxes to influence GDP

Accepted Answer

A)  are examples of automatic fiscal policy because the politicians automatically respond. 
B)  are forms of discretionary fiscal policy. 
C)  are enacted by the Council of Economic Advisers. 
D)  operate without time lags. 
A)  are examples of automatic fiscal policy because the politicians automatically respond. 
B)  are forms of discretionary fiscal policy. 
C)  are enacted by the Council of Economic Advisers. 
D)  operate without time lags.

Question 14

The present value of the government's commitments to pay benefits minus the present value of its tax revenues is called

Accepted Answer

A)  calculated fiscal obligations. 
B)  fiscal imbalance. 
C)  fiscal balance. 
D)  fiscal obligations. 
A)  calculated fiscal obligations. 
B)  fiscal imbalance. 
C)  fiscal balance. 
D)  fiscal obligations.

Question 15

The actual budget deficit is equal to the

Accepted Answer

A)  structural deficit. 
B)  cyclical deficit. 
C)  structural deficit minus the cyclical deficit. 
D)  structural deficit plus the cyclical deficit. 
A)  structural deficit. 
B)  cyclical deficit. 
C)  structural deficit minus the cyclical deficit. 
D)  structural deficit plus the cyclical deficit.

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

If we compare the United States to France, we see that potential GDP per person in France is ________ than that in the United States because the French tax wedge is ________ than the U.S. tax wedge.

Accepted Answer

A)  greater; larger 
B)  greater; smaller 
C)  less; larger 
D)  less; smaller 
A)  greater; larger 
B)  greater; smaller 
C)  less; larger 
D)  less; smaller

Question 18

-The table above has data for a country's government budget. The country has government revenues of ________ billion.

Accepted Answer

A)  $900 
B)  $1,125 
C)  $1,050 
D)  $2,100 
A)  $900 
B)  $1,125 
C)  $1,050 
D)  $2,100

Question 19

In October 2008, President Bush enacted the Alternative Minimum Tax Relief Act of 2008, which resulted in lower taxes on labor income. According the supply-side view, as a result of this act the incentive to work ________ and the tax wedge ________.

Accepted Answer

A)  decreases; increases 
B)  increases; does not change 
C)  increases; decreases 
D)  increases; increases 
A)  decreases; increases 
B)  increases; does not change 
C)  increases; decreases 
D)  increases; increases

Question 20

An example of automatic fiscal policy is when

Accepted Answer

A)  tax revenues decrease as real GDP decreases. 
B)  Congress passes a law that raises tax rates. 
C)  Congress decides to cut government expenditure. 
D)  the president drafts a bill to reduce defense spending. 
A)  tax revenues decrease as real GDP decreases. 
B)  Congress passes a law that raises tax rates. 
C)  Congress decides to cut government expenditure. 
D)  the president drafts a bill to reduce defense spending.

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 5?

The aggregate demand curve is shifted rightward by an increase in government expenditure.

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

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?

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

The budget deficit

Suppose that the government decreases its expenditures on goods and services. Within the AS-AD model, the result will be in real GDP and in the price level.

An increase in tax rates as a result of a new tax law passed by Congress is an example of

The largest item of government outlays is

Which of the following is NOT a government outlay?

During an expansion, tax revenues and government transfer payments .

What is the difference between discretionary fiscal policy and automatic fiscal policy?

Deliberate changes in government expenditures and taxes to influence GDP

The present value of the government's commitments to pay benefits minus the present value of its tax revenues is called

The actual budget deficit is equal to the

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

If we compare the United States to France, we see that potential GDP per person in France is than that in the United States because the French tax wedge is than the U.S. tax wedge.

-The table above has data for a country's government budget. The country has government revenues of ________ billion.

In October 2008, President Bush enacted the Alternative Minimum Tax Relief Act of 2008, which resulted in lower taxes on labor income. According the supply-side view, as a result of this act the incentive to work and the tax wedge .

An example of automatic fiscal policy is when

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

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 5?

The aggregate demand curve is shifted rightward by an increase in government expenditure.

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

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?

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

The budget deficit

Suppose that the government decreases its expenditures on goods and services. Within the AS-AD model, the result will be ________ in real GDP and ________ in the price level.

An increase in tax rates as a result of a new tax law passed by Congress is an example of

The largest item of government outlays is

Which of the following is NOT a government outlay?

During an expansion, tax revenues ________ and government transfer payments ________.

What is the difference between discretionary fiscal policy and automatic fiscal policy?

Deliberate changes in government expenditures and taxes to influence GDP

The present value of the government's commitments to pay benefits minus the present value of its tax revenues is called

The actual budget deficit is equal to the

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

If we compare the United States to France, we see that potential GDP per person in France is ________ than that in the United States because the French tax wedge is ________ than the U.S. tax wedge.

-The table above has data for a country's government budget. The country has government revenues of ________ billion.

In October 2008, President Bush enacted the Alternative Minimum Tax Relief Act of 2008, which resulted in lower taxes on labor income. According the supply-side view, as a result of this act the incentive to work ________ and the tax wedge ________.

An example of automatic fiscal policy is when

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

Suppose that the government decreases its expenditures on goods and services. Within the AS-AD model, the result will be in real GDP and in the price level.

During an expansion, tax revenues and government transfer payments .

If we compare the United States to France, we see that potential GDP per person in France is than that in the United States because the French tax wedge is than the U.S. tax wedge.

In October 2008, President Bush enacted the Alternative Minimum Tax Relief Act of 2008, which resulted in lower taxes on labor income. According the supply-side view, as a result of this act the incentive to work and the tax wedge .