Question 1

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

Accepted Answer

A) decreases consumption. 
B) increases the capital stock in the long run. 
C) reduces national saving. 
D) all of the above. 
A) decreases consumption. 
B) increases the capital stock in the long run. 
C) reduces national saving. 
D) all of the above.

Question 2

A balanced government budget is one where:

Accepted Answer

A) government purchases equal taxes. 
B) government debt is zero. 
C) the governments real savings is zero. 
D) all of the above. 
A) government purchases equal taxes. 
B) government debt is zero. 
C) the governments real savings is zero. 
D) all of the above.

Question 3

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

Question 4

The governments uses of funds include:

Accepted Answer

A) borrowing. 
B) printing money. 
C) paying interest on the past government debt. 
D) all of the above. 
A) borrowing. 
B) printing money. 
C) paying interest on the past government debt. 
D) all of the above.

Question 5

The standard view of the budget deficit is that it:

Accepted Answer

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

Question 6

By varying its budget deficit, a government can:

Accepted Answer

A) change the timing of taxes. 
B) avoid having to raise taxes to pay for a deficit. 
C) avoid accumulation of government debt. 
D) all of the above. 
A) change the timing of taxes. 
B) avoid having to raise taxes to pay for a deficit. 
C) avoid accumulation of government debt. 
D) all of the above.

Question 7

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

Accepted Answer

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

Question 8

If the government runs a deficit, households will feel wealthier.

Accepted Answer

A) True 
 B)False

Question 9

The standard view of the budget deficit is that it:

Accepted Answer

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

Question 10

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

Accepted Answer

A) increases consumption. 
B) increases the capital stock in the long run. 
C) increases national saving. 
D) all of the above. 
A) increases consumption. 
B) increases the capital stock in the long run. 
C) increases national saving. 
D) all of the above.

Question 11

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

Accepted Answer

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

Question 12

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

Accepted Answer

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

Question 13

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

Accepted Answer

A) households save more and consume less in the present. 
B) households save and consume less in the present. 
C) households save less and consume more in the present. 
D) households save and consume more in the present. 
A) households save more and consume less in the present. 
B) households save and consume less in the present. 
C) households save less and consume more in the present. 
D) households save and consume more in the present.

Question 14

Total bond holding of all households is Bgt because:

Accepted Answer

A) the quantity of all private bonds held by the public is zero. 
B) the quantity of all government bonds held by the public is zero. 
C) the public views government bonds as less risky than private bonds. 
D) the public views private bonds as less risky than government bonds. 
A) the quantity of all private bonds held by the public is zero. 
B) the quantity of all government bonds held by the public is zero. 
C) the public views government bonds as less risky than private bonds. 
D) the public views private bonds as less risky than government bonds.

Question 15

Open market operations amount to:

Accepted Answer

A) printing more money and raising taxes and lowering taxes and raising the public debt. 
B) printing less money and reducing taxes and raising taxes and reducing the public debt. 
C) printing less money and raising taxes and lowering taxes and raising the public debt. 
D) printing more money and reducing taxes and raising taxes and reducing the public debt. 
A) printing more money and raising taxes and lowering taxes and raising the public debt. 
B) printing less money and reducing taxes and raising taxes and reducing the public debt. 
C) printing less money and raising taxes and lowering taxes and raising the public debt. 
D) printing more money and reducing taxes and raising taxes and reducing the public debt.

Question 16

If money and the price level are constant, then the government's real budget debt 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 the time path of government purchases does not change and the government cuts lump sum taxes, then:

Accepted Answer

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

Question 18

A pay as you go social security system raises the capital stock.

Accepted Answer

A) True 
 B)False

Question 19

A pay as you go social security system only increase consumption and reduces investment, if:

Accepted Answer

A) households leave bequests. 
B) if households neglect the adverse affects on their descendants. 
C) if the planning horizon is overlapping generations. 
D) households increase their savings. 
A) households leave bequests. 
B) if households neglect the adverse affects on their descendants. 
C) if the planning horizon is overlapping generations. 
D) households increase their savings.

Question 20

The governments sources of funds include:

Accepted Answer

A) government purchases. 
B) transfer payments. 
C) borrowing. 
D) all of the above. 
A) government purchases. 
B) transfer payments. 
C) borrowing. 
D) all of the above.

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

A balanced government budget is one where:

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

The governments uses of funds include:

The standard view of the budget deficit is that it:

By varying its budget deficit, a government can:

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

If the government runs a deficit, households will feel wealthier.

The standard view of the budget deficit is that it:

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:

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 current assets income taxes, then:

Total bond holding of all households is B^g_t because:

Open market operations amount to:

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

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

A pay as you go social security system raises the capital stock.

A pay as you go social security system only increase consumption and reduces investment, if:

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:

A balanced government budget is one where:

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

The governments uses of funds include:

The standard view of the budget deficit is that it:

By varying its budget deficit, a government can:

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

If the government runs a deficit, households will feel wealthier.

The standard view of the budget deficit is that it:

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:

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 current assets income taxes, then:

Total bond holding of all households is Bgt because:

Open market operations amount to:

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

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

A pay as you go social security system raises the capital stock.

A pay as you go social security system only increase consumption and reduces investment, if:

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

Total bond holding of all households is B^g_t because: