Question 1

If households ignore effects on future generations, a pay as you go social security system:

Accepted Answer

A) raises current national savings. 
B) reduces investment. 
C) raises the future capital stock. 
D) all of the above. 
A) raises current national savings. 
B) reduces investment. 
C) raises the future capital stock. 
D) all of the above.

Question 2

If households ignore effects on future generations, a pay as you go social security system:

Accepted Answer

A) reduces investment. 
B) increases GDP in the long run. 
C) increases private saving. 
D) all of the above. 
A) reduces investment. 
B) increases GDP in the long run. 
C) increases private saving. 
D) all of the above.

Question 3

The governments uses of funds include:

Accepted Answer

A) government purchases. 
B) transfer payments. 
C) paying interest on the past government debt. 
D) all of the above. 
A) government purchases. 
B) transfer payments. 
C) paying interest on the past government debt. 
D) all of the above.

Question 4

If households ignore effects on future generations, when a pay as you go social security system starts, the then elderly:

Accepted Answer

A) have a negative income effect on their consumption. 
B) receive benefits that in present value is greater than the present value of their contributions to the system. 
C) receive low returns on any taxes paid into the system. 
D) all of the above. 
A) have a negative income effect on their consumption. 
B) receive benefits that in present value is greater than the present value of their contributions to the system. 
C) receive low returns on any taxes paid into the system. 
D) all of the above.

Question 5

If the time path of government purchases does not change and the government cuts lump sum taxes, then:

Accepted Answer

A) the interest rate does not change. 
B) the real wage rate rises. 
C) the future capital stock falls. 
D) all of the above. 
A) the interest rate does not change. 
B) the real wage rate rises. 
C) the future capital stock falls. 
D) all of the above.

Question 6

A strategic budget deficit is designed to:

Accepted Answer

A) increase GDP. 
B) increase economic activity. 
C) constrain the behaviour of future governments. 
D) all of the above. 
A) increase GDP. 
B) increase economic activity. 
C) constrain the behaviour of future governments. 
D) all of the above.

Question 7

The standard view of the budget deficit is that it:

Accepted Answer

A) reduces the GDP in the long run. 
B) increases investment. 
C) increases the capital stock in the long run. 
D) all of the above. 
A) reduces the GDP in the long run. 
B) increases investment. 
C) increases the capital stock in the long run. 
D) all of the above.

Question 8

What is the government budget constraint when government borrowing is allowed?

Accepted Answer

The government budget deficit with gover

Question 9

If households ignore effects on future generations, a pay as you go social security system:

Accepted Answer

A) reduces investment. 
B) reduces GDP in the long run. 
C) reduces private saving. 
D) all of the above. 
A) reduces investment. 
B) reduces GDP in the long run. 
C) reduces private saving. 
D) all of the above.

Question 10

Households may feel wealthier due to a tax cut, if:

Accepted Answer

A) they are very concerned about future generations. 
B) they expect the bonds created by the deficit to be paid off after their lifetime. 
C) they are using an infinite planning horizon. 
D) they plan to leave a bequest to their heirs. 
A) they are very concerned about future generations. 
B) they expect the bonds created by the deficit to be paid off after their lifetime. 
C) they are using an infinite planning horizon. 
D) they plan to leave a bequest to their heirs.

Question 11

The governments sources of funds include:

Accepted Answer

A) taxes. 
B) government purchases. 
C) paying interest on past bonds. 
D) all of the above. 
A) taxes. 
B) government purchases. 
C) paying interest on past bonds. 
D) all of the above.

Question 12

The governments uses of funds include:

Accepted Answer

A) government purchases. 
B) borrowing. 
C) printing money. 
D) all of the above. 
A) government purchases. 
B) borrowing. 
C) printing money. 
D) all of the above.

Question 13

If currently alive households take full account of the negative affects of a pay as you go social security system on their descendants, then the:

Accepted Answer

A) effects are magnified. 
B) effects are nil. 
C) effects are exponential. 
D) effects are unchanged. 
A) effects are magnified. 
B) effects are nil. 
C) effects are exponential. 
D) effects are unchanged.

Question 14

If the time path of government purchases does not change and the government cuts current labour income taxes, then:

Accepted Answer

A) labour supply is shifted to the future. 
B) labour supply is shifted to the present. 
C) present GDP is reduced. 
D) future GDP is increased. 
A) labour supply is shifted to the future. 
B) labour supply is shifted to the present. 
C) present GDP is reduced. 
D) future GDP is increased.

Question 15

If households ignore effects on future generations when a pay as you go social security system starts, the then elderly:

Accepted Answer

A) have a positive income effect on their consumption. 
B) receive benefits that in present value is less the present value of their contributions. 
C) receive low returns on any taxes paid into the system. 
D) all of the above. 
A) have a positive income effect on their consumption. 
B) receive benefits that in present value is less the present value of their contributions. 
C) receive low returns on any taxes paid into the system. 
D) all of the above.

Question 16

If money and the price level are constant, then the government's real budget deficit is:

Accepted Answer

A) (Bgt - Bgt-1)/P. 
B) Bgt/P. 
C) (Bt + Bgt)/P. 
D) none of the above. 
A) (Bgt - Bgt-1)/P. 
B) Bgt/P. 
C) (Bt + Bgt)/P. 
D) none of the above.

Question 17

If households ignore effects on future generations, a pay as you go social security system:

Accepted Answer

A) raises investment. 
B) increases GDP in the long run. 
C) reduces private saving. 
D) all of the above. 
A) raises investment. 
B) increases GDP in the long run. 
C) reduces private saving. 
D) all of the above.

Question 18

If the time path of government purchases does not change and the government cuts lump sum taxes, then:

Accepted Answer

A) real GDP falls. 
B) real consumption falls. 
C) real gross investment does not change. 
D) all of the above. 
A) real GDP falls. 
B) real consumption falls. 
C) real gross investment does not change. 
D) all of the above.

Question 19

Ricardian equivalence holds:

Accepted Answer

A) only for year to year changes in the governments budget. 
B) no matter how long until the bonds are to be paid off. 
C) only with a government deficit not a surplus. 
D) only with a government surplus not a deficit. 
A) only for year to year changes in the governments budget. 
B) no matter how long until the bonds are to be paid off. 
C) only with a government deficit not a surplus. 
D) only with a government surplus not a deficit.

Question 20

The governments sources of funds include:

Accepted Answer

A) taxes. 
B) printing money. 
C) borrowing. 
D) all of the above. 
A) taxes. 
B) printing money. 
C) borrowing. 
D) all of the above.

If households ignore effects on future generations, a pay as you go social security system:

If households ignore effects on future generations, a pay as you go social security system:

The governments uses of funds include:

If households ignore effects on future generations, when a pay as you go social security system starts, the then elderly:

If the time path of government purchases does not change and the government cuts lump sum taxes, then:

A strategic budget deficit is designed to:

The standard view of the budget deficit is that it:

What is the government budget constraint when government borrowing is allowed?

If households ignore effects on future generations, a pay as you go social security system:

Households may feel wealthier due to a tax cut, if:

The governments sources of funds include:

The governments uses of funds include:

If currently alive households take full account of the negative affects of a pay as you go social security system on their descendants, then the:

If the time path of government purchases does not change and the government cuts current labour income taxes, then:

If households ignore effects on future generations when a pay as you go social security system starts, the then elderly:

If money and the price level are constant, then the government's real budget deficit is:

If households ignore effects on future generations, a pay as you go social security system:

If the time path of government purchases does not change and the government cuts lump sum taxes, then:

Ricardian equivalence holds:

The governments sources of funds include:

Thinking About Macroeconomics

National-Income Accounting: Gross Domestic Product and the Price Level

Introduction to Economic Growth

Working With the Solow Growth Model

Conditional Convergence and Long-Run Economic Growth

Macroeconomics Without Microeconomic Foundations

Markets, Prices, Supply, and Demand

Consumption, Saving, and Investment

An Equilibrium Business-Cycle Model

Capital Utilization and Unemployment

The Demand for Money and the Price Level

Inflation, Money Growth, and Interest Rates

Government Expenditure

Taxes

Money and Business Cycles I: the Price-Misperceptions Model

Money and Business Cycles Ii: Sticky Prices and Nominal Wage Rates

World Markets in Goods and Credit

Exchange Rates

Filters

Exam 15: Public Debt

If households ignore effects on future generations, a pay as you go social security system:

If households ignore effects on future generations, a pay as you go social security system:

The governments uses of funds include:

If households ignore effects on future generations, when a pay as you go social security system starts, the then elderly:

If the time path of government purchases does not change and the government cuts lump sum taxes, then:

A strategic budget deficit is designed to:

The standard view of the budget deficit is that it:

What is the government budget constraint when government borrowing is allowed?

If households ignore effects on future generations, a pay as you go social security system:

Households may feel wealthier due to a tax cut, if:

The governments sources of funds include:

The governments uses of funds include:

If currently alive households take full account of the negative affects of a pay as you go social security system on their descendants, then the:

If the time path of government purchases does not change and the government cuts current labour income taxes, then:

If households ignore effects on future generations when a pay as you go social security system starts, the then elderly:

If money and the price level are constant, then the government's real budget deficit is:

If households ignore effects on future generations, a pay as you go social security system:

If the time path of government purchases does not change and the government cuts lump sum taxes, then:

Ricardian equivalence holds:

The governments sources of funds include:

Thinking About Macroeconomics

National-Income Accounting: Gross Domestic Product and the Price Level

Introduction to Economic Growth

Working With the Solow Growth Model

Conditional Convergence and Long-Run Economic Growth

Macroeconomics Without Microeconomic Foundations

Markets, Prices, Supply, and Demand

Consumption, Saving, and Investment

An Equilibrium Business-Cycle Model

Capital Utilization and Unemployment

The Demand for Money and the Price Level

Inflation, Money Growth, and Interest Rates

Government Expenditure

Taxes

Money and Business Cycles I: the Price-Misperceptions Model

Money and Business Cycles Ii: Sticky Prices and Nominal Wage Rates

World Markets in Goods and Credit

Exchange Rates

Filters