Question 1

The built-in stabilizers in the economy tend to

Accepted Answer

A)  fully offset irregular swings in real GDP. 
B)  magnify somewhat the irregular swings in real GDP. 
C)  dampen the irregular swings in real GDP. 
D)  overcompensate for the irregular swings in real GDP. 
A)  fully offset irregular swings in real GDP. 
B)  magnify somewhat the irregular swings in real GDP. 
C)  dampen the irregular swings in real GDP. 
D)  overcompensate for the irregular swings in real GDP.

Question 2

In 2018, foreign ownership of the total public debt of the United States was about

Accepted Answer

A)  10 percent. 
B)  29 percent. 
C)  60 percent. 
D)  75 percent. 
A)  10 percent. 
B)  29 percent. 
C)  60 percent. 
D)  75 percent.

Question 3

Financing wartime expenditures by increasing internally held public debt permits a nation to defer a part
of the economic cost of war.

Accepted Answer

A) True 
 B)False

Question 4

More than half of the U.S. public debt is owed to Americans.

Accepted Answer

A) True 
 B)False

Question 5

Accepted Answer

A)  cyclically adjusted budget surplus. 
B)  actual budget deﬁcit. 
C)  cyclically adjusted budget deﬁcit. 
D)  actual budget surplus. 
A)  cyclically adjusted budget surplus. 
B)  actual budget deﬁcit. 
C)  cyclically adjusted budget deﬁcit. 
D)  actual budget surplus.

Question 6

When Social Security contributions have exceeded payouts in the past, the excess amounts were used
to help ﬁnance the federal government's budget deﬁcits.

Accepted Answer

A) True 
 B)False

Question 7

A major advantage of the built-in or automatic stabilizers is that they

Accepted Answer

A)  simultaneously stabilize the economy and reduce the absolute size of the public debt. 
B)  automatically produce surpluses during recessions and deﬁcits during inﬂations. 
C)  require no legislative action by Congress to be made effective. 
D)  guarantee that the federal budget will be balanced over the course of the business cycle. 
A)  simultaneously stabilize the economy and reduce the absolute size of the public debt. 
B)  automatically produce surpluses during recessions and deﬁcits during inﬂations. 
C)  require no legislative action by Congress to be made effective. 
D)  guarantee that the federal budget will be balanced over the course of the business cycle.

Question 8

If Congress passes legislation to increase government spending to counter the effects of a recession, then this would be an example of a(n)

Accepted Answer

A)  supply-side ﬁscal policy 
B)  expansionary ﬁscal policy. 
C)  contractionary ﬁscal policy. 
D)  nondiscretionary ﬁscal policy. 
A)  supply-side ﬁscal policy 
B)  expansionary ﬁscal policy. 
C)  contractionary ﬁscal policy. 
D)  nondiscretionary ﬁscal policy.

Question 9

The concept of a "political business cycle" implies a misuse of ﬁscal policy making it a source of
economic instability.

Accepted Answer

A) True 
 B)False

Question 10

$$\begin{array} { | c | c | } 
\hline \text { Gross Domestic Product (GDP) } & \text { Consumption (C) } \
\hline \$ 0 & \$ 40 \
\hline 100 & 120 \
\hline 200 & 200 \
\hline 300 & 280 \
\hline 400 & 360 \
\hline
\end{array}$$ The accompanying table is the before-tax consumption schedule for a closed economy. If a lump-sum tax (the same tax amount at each level of GDP) of $40 is imposed in this economy, the tax system

Accepted Answer

A)  is regressive. 
B)  is proportional. 
C)  is progressive. 
D)  may be either proportional or progressive. 
A)  is regressive. 
B)  is proportional. 
C)  is progressive. 
D)  may be either proportional or progressive.

Question 11

An effective expansionary ﬁscal policy will

Accepted Answer

A)  reduce a cyclical deﬁcit but necessarily increase the actual deﬁcit. 
B)  reduce the cyclically adjusted deﬁcit. 
C)  increase the cyclically adjusted deﬁcit but reduce the actual deﬁcit. 
D)  always result in a balanced actual budget once full employment is achieved. 
A)  reduce a cyclical deﬁcit but necessarily increase the actual deﬁcit. 
B)  reduce the cyclically adjusted deﬁcit. 
C)  increase the cyclically adjusted deﬁcit but reduce the actual deﬁcit. 
D)  always result in a balanced actual budget once full employment is achieved.

Question 12

The American Recovery and Reinvestment Act of 2009 was implemented primarily to

Accepted Answer

A)  reduce inﬂationary pressure caused by oil price increases. 
B)  curb the overspending by households that contributed to the Great Recession. 
C)  bring the federal budget back into balance. 
D)  stimulate aggregate demand and employment. 
A)  reduce inﬂationary pressure caused by oil price increases. 
B)  curb the overspending by households that contributed to the Great Recession. 
C)  bring the federal budget back into balance. 
D)  stimulate aggregate demand and employment.

Question 13

The so-called crowding-out effect refers to government spending crowding out private investment
spending.

Accepted Answer

A) True 
 B)False

Question 14

What does the cyclically adjusted budget measure and of what signiﬁcance is this concept?

Accepted Answer

The cyclically adjusted budget measures

Question 15

Which of the following ﬁscal policy changes would be the most expansionary?

Accepted Answer

A)  a $40 billion increase in government spending 
B)  a $20 billion tax cut and $20 billion increase in government spending 
C)  a $10 billion tax cut and $30 billion increase in government spending 
D)  a $40 billion tax cut 
A)  a $40 billion increase in government spending 
B)  a $20 billion tax cut and $20 billion increase in government spending 
C)  a $10 billion tax cut and $30 billion increase in government spending 
D)  a $40 billion tax cut

Question 16

The average tax rate required to service the public debt is roughly measured by

Accepted Answer

A)  the absolute size of the debt. 
B)  the debt as a fraction of the GDP. 
C)  interest on the debt as a percentage of the GDP. 
D)  the ratio of government spending to the GDP. 
A)  the absolute size of the debt. 
B)  the debt as a fraction of the GDP. 
C)  interest on the debt as a percentage of the GDP. 
D)  the ratio of government spending to the GDP.

Question 17

When the Federal government uses taxation and spending actions to stimulate the economy, it is conducting

Accepted Answer

A)  ﬁscal policy. 
B)  incomes policy. 
C)  monetary policy. 
D)  employment policy. 
A)  ﬁscal policy. 
B)  incomes policy. 
C)  monetary policy. 
D)  employment policy.

Question 18

Economists refer to a budget deﬁcit that exists when the economy is achieving full employment as a

Accepted Answer

A)  cyclical deﬁcit. 
B)  cyclically adjusted deﬁcit. 
C)  natural deﬁcit. 
D)  nonrecurring deﬁcit. 
A)  cyclical deﬁcit. 
B)  cyclically adjusted deﬁcit. 
C)  natural deﬁcit. 
D)  nonrecurring deﬁcit.

Question 19

Accepted Answer

A)  an increase in taxes and an increase in government spending 
B)  a decrease in taxes and an increase in government spending 
C)  an increase in taxes and a decrease in government spending 
D)  a decrease in taxes and a decrease in government spending 
A)  an increase in taxes and an increase in government spending 
B)  a decrease in taxes and an increase in government spending 
C)  an increase in taxes and a decrease in government spending 
D)  a decrease in taxes and a decrease in government spending

Question 20

Which of the following statements is correct?

Accepted Answer

A)  Federal deﬁcits were larger in the early 2000s than in the late 2000s. 
B)  Deep tax cuts always expand tax revenues and reduce the public debt. 
C)  The public debt has usually declined during wartime. 
D)  There is a tendency for the public debt to grow during recessions. 
A)  Federal deﬁcits were larger in the early 2000s than in the late 2000s. 
B)  Deep tax cuts always expand tax revenues and reduce the public debt. 
C)  The public debt has usually declined during wartime. 
D)  There is a tendency for the public debt to grow during recessions.

The built-in stabilizers in the economy tend to

In 2018, foreign ownership of the total public debt of the United States was about

Financing wartime expenditures by increasing internally held public debt permits a nation to defer a part of the economic cost of war.

More than half of the U.S. public debt is owed to Americans.

When Social Security contributions have exceeded payouts in the past, the excess amounts were used to help ﬁnance the federal government's budget deﬁcits.

A major advantage of the built-in or automatic stabilizers is that they

If Congress passes legislation to increase government spending to counter the effects of a recession, then this would be an example of a(n)

The concept of a "political business cycle" implies a misuse of ﬁscal policy making it a source of economic instability.

Gross Domestic Product (GDP) Consumption (C) \ 0 \ 40 100 120 200 200 300 280 400 360 The accompanying table is the before-tax consumption schedule for a closed economy. If a lump-sum tax (the same tax amount at each level of GDP) of $40 is imposed in this economy, the tax system

An effective expansionary ﬁscal policy will

The American Recovery and Reinvestment Act of 2009 was implemented primarily to

The so-called crowding-out effect refers to government spending crowding out private investment spending.

What does the cyclically adjusted budget measure and of what signiﬁcance is this concept?

Which of the following ﬁscal policy changes would be the most expansionary?

The average tax rate required to service the public debt is roughly measured by

When the Federal government uses taxation and spending actions to stimulate the economy, it is conducting

Economists refer to a budget deﬁcit that exists when the economy is achieving full employment as a

Which of the following statements is correct?

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

Filters

Exam 13: Fiscal Policy, Deficits, and Debt

The built-in stabilizers in the economy tend to

In 2018, foreign ownership of the total public debt of the United States was about

Financing wartime expenditures by increasing internally held public debt permits a nation to defer a part of the economic cost of war.

More than half of the U.S. public debt is owed to Americans.

When Social Security contributions have exceeded payouts in the past, the excess amounts were used to help ﬁnance the federal government's budget deﬁcits.

A major advantage of the built-in or automatic stabilizers is that they

If Congress passes legislation to increase government spending to counter the effects of a recession, then this would be an example of a(n)

The concept of a "political business cycle" implies a misuse of ﬁscal policy making it a source of economic instability.

Gross Domestic Product (GDP) Consumption (C) \ 0 \ 40 100 120 200 200 300 280 400 360 The accompanying table is the before-tax consumption schedule for a closed economy. If a lump-sum tax (the same tax amount at each level of GDP) of $40 is imposed in this economy, the tax system

An effective expansionary ﬁscal policy will

The American Recovery and Reinvestment Act of 2009 was implemented primarily to

The so-called crowding-out effect refers to government spending crowding out private investment spending.

What does the cyclically adjusted budget measure and of what signiﬁcance is this concept?

Which of the following ﬁscal policy changes would be the most expansionary?

The average tax rate required to service the public debt is roughly measured by

When the Federal government uses taxation and spending actions to stimulate the economy, it is conducting

Economists refer to a budget deﬁcit that exists when the economy is achieving full employment as a

Which of the following statements is correct?

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

Filters