Question 1

Among the government's uses of funds are;

Accepted Answer

A) transfer payments. 
B) tax revenue. 
C) real revenue from printing money. 
D) all of the above. 
A) transfer payments. 
B) tax revenue. 
C) real revenue from printing money. 
D) all of the above.

Question 2

The government's budget constraint is:

Accepted Answer

A) Gt + Vt = Tt + (Mt - Mt-1 )/P 
B) Gt + Vt - Tt = (Mt - Mt-1 )/P 
C) -Gt = Vt - Tt, if revenue from money creation is zero. 
D) all of the above. 
A) Gt + Vt = Tt + (Mt - Mt-1 )/P 
B) Gt + Vt - Tt = (Mt - Mt-1 )/P 
C) -Gt = Vt - Tt, if revenue from money creation is zero. 
D) all of the above.

Question 3

In the market clearing model the intertemporal substitution effect from a permanent increase in government purchases:

Accepted Answer

A) works through real interest rate changes. 
B) works through real wage changes. 
C) works through real interest rate and real wage changes. 
D) does not exist because the real interest rate and real wage rated do not change. 
A) works through real interest rate changes. 
B) works through real wage changes. 
C) works through real interest rate and real wage changes. 
D) does not exist because the real interest rate and real wage rated do not change.

Question 4

How does government without borrowing affect the household's budget constraint?

Accepted Answer

The household both receives transfer pay

Question 5

A temporary decrease in government purchases does not decrease the real interest rate according to the market clearing model because:

Accepted Answer

A) the supply of capital services and demand for capital services decrease about the same amount. 
B) neither demand for capital services nor supply of capital services shift due to the permanent increase in government purchases. 
C) the demand for capital services is downward sloping. 
D) the supply of capital services is upward sloping. 
A) the supply of capital services and demand for capital services decrease about the same amount. 
B) neither demand for capital services nor supply of capital services shift due to the permanent increase in government purchases. 
C) the demand for capital services is downward sloping. 
D) the supply of capital services is upward sloping.

Question 6

The government's budget is:

Accepted Answer

A) government purchases plus transfer payments equal taxes plus revenue from money creation. 
B) government purchases plus transfers less taxes equal revenue from money creation. 
C) the negative of government equals transfers less taxes, if revenue from money creation is zero. 
D) all of the above. 
A) government purchases plus transfer payments equal taxes plus revenue from money creation. 
B) government purchases plus transfers less taxes equal revenue from money creation. 
C) the negative of government equals transfers less taxes, if revenue from money creation is zero. 
D) all of the above.

Question 7

What are the effects of a temporary increase in government purchases?

Accepted Answer

If government purchases rise temporarily

Question 8

What is the government's budget constraint without government borrowing and what does it show us?

Accepted Answer

The government's budget constraint witho

Question 9

A temporary decrease in government purchases does not increase the real wage according to the market clearing model because:

Accepted Answer

A) labour supply and labour demand decrease about the same amount. 
B) labour supply is fixed. 
C) labour demand is downward sloping. 
D) neither labour demand nor labour supply shift due to the permanent increase in government purchases. 
A) labour supply and labour demand decrease about the same amount. 
B) labour supply is fixed. 
C) labour demand is downward sloping. 
D) neither labour demand nor labour supply shift due to the permanent increase in government purchases.

Question 10

If a household's transfer payments less taxes is positive, then the government:

Accepted Answer

A) is a net source of funds for that household. 
B) is a net use of fund of funds for that household. 
C) is a net drain on that household. 
D) does not affect that household's budget constraint. 
A) is a net source of funds for that household. 
B) is a net use of fund of funds for that household. 
C) is a net drain on that household. 
D) does not affect that household's budget constraint.

Question 11

The model predicts that a temporary decrease in government purchases causes:

Accepted Answer

A) an increase in consumption. 
B) a reduction in real GDP. 
C) an increase in gross investment. 
D) all of the above. 
A) an increase in consumption. 
B) a reduction in real GDP. 
C) an increase in gross investment. 
D) all of the above.

Question 12

The model predicts that a temporary decrease in government purchases causes:

Accepted Answer

A) an increase in consumption. 
B) a reduction in real GDP. 
C) an increase in gross investment. 
D) all of the above. 
A) an increase in consumption. 
B) a reduction in real GDP. 
C) an increase in gross investment. 
D) all of the above.

Question 13

With a permanent change in government purchases the model predicts consumption is:

Accepted Answer

A) acyclical. 
B) procyclical. 
C) countercylical. 
D) exogenous. 
A) acyclical. 
B) procyclical. 
C) countercylical. 
D) exogenous.

Question 14

If the money supply does not change, then the government's budget constraint without borrowing is:

Accepted Answer

A) Gt - Vt = Tt 
B) Gt = Vt - Tt 
C) -Gt = Vt - Tt 
D) all of the above. 
A) Gt - Vt = Tt 
B) Gt = Vt - Tt 
C) -Gt = Vt - Tt 
D) all of the above.

Question 15

What has been the US experience in war time temporary increase in government purchases and how do they conform with the predictions of the model?

Accepted Answer

Counter to the predictions of the model,

Question 16

The biggest category of state and local expenditures are:

Accepted Answer

A) education. 
B) social protection. 
C) defense. 
D) none of the above. 
A) education. 
B) social protection. 
C) defense. 
D) none of the above.

Question 17

The model predicts that a temporary increase in government expenditures will lead to:

Accepted Answer

A) a decrease in consumption. 
B) an increase in investment. 
C) a decrease in GDP. 
D) none of the above. 
A) a decrease in consumption. 
B) an increase in investment. 
C) a decrease in GDP. 
D) none of the above.

Question 18

Among the government's sources of funds are;

Accepted Answer

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

Question 19

Government can use its funds to purchase goods or transfer money to people.

Accepted Answer

A) True 
 B)False

Question 20

People might work more during a war time temporary increase in government purchases because of:

Accepted Answer

A) patriotism. 
B) the increase in the MPL as the model predicts. 
C) increased investment the model predicts. 
D) all of the above. 
A) patriotism. 
B) the increase in the MPL as the model predicts. 
C) increased investment the model predicts. 
D) all of the above.

Among the government's uses of funds are;

The government's budget constraint is:

In the market clearing model the intertemporal substitution effect from a permanent increase in government purchases:

How does government without borrowing affect the household's budget constraint?

A temporary decrease in government purchases does not decrease the real interest rate according to the market clearing model because:

The government's budget is:

What are the effects of a temporary increase in government purchases?

What is the government's budget constraint without government borrowing and what does it show us?

A temporary decrease in government purchases does not increase the real wage according to the market clearing model because:

If a household's transfer payments less taxes is positive, then the government:

The model predicts that a temporary decrease in government purchases causes:

The model predicts that a temporary decrease in government purchases causes:

With a permanent change in government purchases the model predicts consumption is:

If the money supply does not change, then the government's budget constraint without borrowing is:

What has been the US experience in war time temporary increase in government purchases and how do they conform with the predictions of the model?

The biggest category of state and local expenditures are:

The model predicts that a temporary increase in government expenditures will lead to:

Among the government's sources of funds are;

Government can use its funds to purchase goods or transfer money to people.

People might work more during a war time temporary increase in government purchases because of:

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

Taxes

Public Debt

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 13: Government Expenditure

Among the government's uses of funds are;

The government's budget constraint is:

In the market clearing model the intertemporal substitution effect from a permanent increase in government purchases:

How does government without borrowing affect the household's budget constraint?

A temporary decrease in government purchases does not decrease the real interest rate according to the market clearing model because:

The government's budget is:

What are the effects of a temporary increase in government purchases?

What is the government's budget constraint without government borrowing and what does it show us?

A temporary decrease in government purchases does not increase the real wage according to the market clearing model because:

If a household's transfer payments less taxes is positive, then the government:

The model predicts that a temporary decrease in government purchases causes:

The model predicts that a temporary decrease in government purchases causes:

With a permanent change in government purchases the model predicts consumption is:

If the money supply does not change, then the government's budget constraint without borrowing is:

What has been the US experience in war time temporary increase in government purchases and how do they conform with the predictions of the model?

The biggest category of state and local expenditures are:

The model predicts that a temporary increase in government expenditures will lead to:

Among the government's sources of funds are;

Government can use its funds to purchase goods or transfer money to people.

People might work more during a war time temporary increase in government purchases because of:

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

Taxes

Public Debt

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