Question 1

If we look at governmental budgets over time using nominal figures,we

Accepted Answer

A)  have a clearer understanding of the real size of the budget 
B)  are able to focus on the real impact of government spending on potential GNP 
C)  tend to overestimate the size of the budgetary growth 
D)  usually underestimate the size of the burden of the debt 
E)  are ignoring what we can learn from nominal data 
A)  have a clearer understanding of the real size of the budget 
B)  are able to focus on the real impact of government spending on potential GNP 
C)  tend to overestimate the size of the budgetary growth 
D)  usually underestimate the size of the burden of the debt 
E)  are ignoring what we can learn from nominal data

Question 2

Looking at their ratio of debt to GDP,which following five countries should be expected to face serious economic trouble in the future?

Accepted Answer

A)  Fredonia: 40 percent 
B)  Syldavia: 70 percent 
C)  Borduria: 120 percent 
D)  Ruritania: 20 percent 
E)  Dystopia: 100 percent. 
A)  Fredonia: 40 percent 
B)  Syldavia: 70 percent 
C)  Borduria: 120 percent 
D)  Ruritania: 20 percent 
E)  Dystopia: 100 percent.

Question 3

Which of the following can occur simultaneously?

Accepted Answer

A)  An increase in the national debt and a budget surplus 
B)  A decrease in the national debt and a balanced budget 
C)  An unchanged national debt and a budget deficit 
D)  Positive national debt and a budget surplus 
E)  A decreasing national debt and a budget deficit. 
A)  An increase in the national debt and a budget surplus 
B)  A decrease in the national debt and a balanced budget 
C)  An unchanged national debt and a budget deficit 
D)  Positive national debt and a budget surplus 
E)  A decreasing national debt and a budget deficit.

Question 4

Most corporations do not pay back their debt.

Accepted Answer

A) True 
 B)False

Question 5

The U.S.government has tended to keep its deficit-to-GDP ratio significantly above 10 percent for the last 50 years.

Accepted Answer

A) True 
 B)False

Question 6

Countercyclical fiscal policy is viewed by most economists

Accepted Answer

A)  as the perfect instrument for preventing boom and bust economies 
B)  as a useful but imperfect instrument for reacting to boom and bust economies 
C)  having no impact in the short run or long run. 
D)  doing more damage than good in both the short run and long run. 
E)  as having an impact only in the long run. 
A)  as the perfect instrument for preventing boom and bust economies 
B)  as a useful but imperfect instrument for reacting to boom and bust economies 
C)  having no impact in the short run or long run. 
D)  doing more damage than good in both the short run and long run. 
E)  as having an impact only in the long run.

Question 7

Tax avoidance reduces the federal government's revenue flow.

Accepted Answer

A) True 
 B)False

Question 8

In the 2000s,government budget deficits became larger as a percent of GDP.

Accepted Answer

A) True 
 B)False

Question 9

Federal government outlays as a fraction of GDP tripled between 1959 and 2009.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following correctly represents the budget deficit?

Accepted Answer

A)  Tax revenue - government purchases 
B)  Tax revenue - government outlays 
C)  Government purchases - tax revenue 
D)  Government outlays - tax revenue 
E)  Government outlays - tax revenue - transfer payments. 
A)  Tax revenue - government purchases 
B)  Tax revenue - government outlays 
C)  Government purchases - tax revenue 
D)  Government outlays - tax revenue 
E)  Government outlays - tax revenue - transfer payments.

Question 11

Debt held by the public and total debt are two different concepts.

Accepted Answer

A) True 
 B)False

Question 12

The federal government

Accepted Answer

A)  runs a deficit when tax revenues are greater than government purchases. 
B)  runs a surplus when tax revenues are smaller than government purchases. 
C)  runs a deficit when tax revenues are smaller than government outlays. 
D)  runs a surplus when tax revenues are greater than government purchases. 
E)  runs a surplus when tax revenues are smaller than transfer payments.. 
A)  runs a deficit when tax revenues are greater than government purchases. 
B)  runs a surplus when tax revenues are smaller than government purchases. 
C)  runs a deficit when tax revenues are smaller than government outlays. 
D)  runs a surplus when tax revenues are greater than government purchases. 
E)  runs a surplus when tax revenues are smaller than transfer payments..

Question 13

If the MPC is 0.75,what is the value of the government purchases multiplier?

Accepted Answer

A)  -1.33 
B)  3.0 
C)  -3.0 
D)  4.0 
E)  -4.0 
A)  -1.33 
B)  3.0 
C)  -3.0 
D)  4.0 
E)  -4.0

Question 14

Transfer payments provide benefits to

Accepted Answer

A)  all those in need 
B)  those who have paid into governmental funds through their workplace 
C)  those who are eligible recipients 
D)  those who provide some service to the government 
E)  anyone transferring from one stage of their life to another 
A)  all those in need 
B)  those who have paid into governmental funds through their workplace 
C)  those who are eligible recipients 
D)  those who provide some service to the government 
E)  anyone transferring from one stage of their life to another

Question 15

Government outlays

Accepted Answer

A)  are the same as "G" in the short-run macro model. 
B)  do not include transfer payments. 
C)  are always smaller than government purchases. 
D)  are always greater than government purchases. 
E)  tend to decline in the long run. 
A)  are the same as "G" in the short-run macro model. 
B)  do not include transfer payments. 
C)  are always smaller than government purchases. 
D)  are always greater than government purchases. 
E)  tend to decline in the long run.

Question 16

In an expansion,

Accepted Answer

A)  federal budget deficits tend to rise 
B)  federal budget deficits tend to fall 
C)  the federal debt tends to rise faster than in a recession 
D)  federal government tax receipts tend to fall 
E)  there is pressure on the Fed to monetize the debt 
A)  federal budget deficits tend to rise 
B)  federal budget deficits tend to fall 
C)  the federal debt tends to rise faster than in a recession 
D)  federal government tax receipts tend to fall 
E)  there is pressure on the Fed to monetize the debt

Question 17

At the end of 2009,the national debt stood at 60 percent of GDP,substantially higher than its World War II level.

Accepted Answer

A) True 
 B)False

Question 18

The national debt

Accepted Answer

A)  exists because of past government budget deficits 
B)  is the difference between the government's spending and revenue in a given year 
C)  is the amount households owe on credit cards,mortgages and other loans 
D)  is a flow variable 
E)  is the same as the government's budget deficit 
A)  exists because of past government budget deficits 
B)  is the difference between the government's spending and revenue in a given year 
C)  is the amount households owe on credit cards,mortgages and other loans 
D)  is a flow variable 
E)  is the same as the government's budget deficit

Question 19

The sharp rise in the debt-to-GDP ratio in 2008-2009

Accepted Answer

A)  was exclusively automatic due to the effect of declining income on government outlays and tax revenues. 
B)  was exclusively due to an aggressive fiscal policy. 
C)  was exclusively due to military expenditures. 
D)  was partly automatic due to the effect of declining income on government outlays and tax revenues,and partly due to an aggressive fiscal policy. 
E)  was exclusively due to foreign aid expenditures. 
A)  was exclusively automatic due to the effect of declining income on government outlays and tax revenues. 
B)  was exclusively due to an aggressive fiscal policy. 
C)  was exclusively due to military expenditures. 
D)  was partly automatic due to the effect of declining income on government outlays and tax revenues,and partly due to an aggressive fiscal policy. 
E)  was exclusively due to foreign aid expenditures.

Question 20

Countercyclical fiscal policy has a serious problem with

Accepted Answer

A)  overshooting the desired impact by a factor of 10. 
B)  the irreversibility of actions. 
C)  the tendency of the Federal Reserve to immediately counter Congressional action. 
D)  the courts as it has been held to be unconstitutional. 
E)  overshooting the desired impact by a factor of 3. 
A)  overshooting the desired impact by a factor of 10. 
B)  the irreversibility of actions. 
C)  the tendency of the Federal Reserve to immediately counter Congressional action. 
D)  the courts as it has been held to be unconstitutional. 
E)  overshooting the desired impact by a factor of 3.

If we look at governmental budgets over time using nominal figures,we

Looking at their ratio of debt to GDP,which following five countries should be expected to face serious economic trouble in the future?

Which of the following can occur simultaneously?

Most corporations do not pay back their debt.

The U.S.government has tended to keep its deficit-to-GDP ratio significantly above 10 percent for the last 50 years.

Countercyclical fiscal policy is viewed by most economists

Tax avoidance reduces the federal government's revenue flow.

In the 2000s,government budget deficits became larger as a percent of GDP.

Federal government outlays as a fraction of GDP tripled between 1959 and 2009.

Which of the following correctly represents the budget deficit?

Debt held by the public and total debt are two different concepts.

The federal government

If the MPC is 0.75,what is the value of the government purchases multiplier?

Transfer payments provide benefits to

Government outlays

In an expansion,

At the end of 2009,the national debt stood at 60 percent of GDP,substantially higher than its World War II level.

The national debt

The sharp rise in the debt-to-GDP ratio in 2008-2009

Countercyclical fiscal policy has a serious problem with

What is Economics?

Scarcity, Choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

What Macroeconomics Tries to Explain

Production, Income, and Employment

The Price Level and Inflation

The Classical Long run Model

Economic Growth and Rising Living Standards

Economic Fluctuations

The Short-run Macro Model

Money, Banks, and the Federal Reserve

The Money Market and Monetary Policy

Aggregate Demand and Aggregate Supply

Inflation and Monetary Policy

Exchange Rates and Macroeconomic Policy

Filters

Exam 12: Fiscal Policy

If we look at governmental budgets over time using nominal figures,we

Looking at their ratio of debt to GDP,which following five countries should be expected to face serious economic trouble in the future?

Which of the following can occur simultaneously?

Most corporations do not pay back their debt.

The U.S.government has tended to keep its deficit-to-GDP ratio significantly above 10 percent for the last 50 years.

Countercyclical fiscal policy is viewed by most economists

Tax avoidance reduces the federal government's revenue flow.

In the 2000s,government budget deficits became larger as a percent of GDP.

Federal government outlays as a fraction of GDP tripled between 1959 and 2009.

Which of the following correctly represents the budget deficit?

Debt held by the public and total debt are two different concepts.

The federal government

If the MPC is 0.75,what is the value of the government purchases multiplier?

Transfer payments provide benefits to

Government outlays

In an expansion,

At the end of 2009,the national debt stood at 60 percent of GDP,substantially higher than its World War II level.

The national debt

The sharp rise in the debt-to-GDP ratio in 2008-2009

Countercyclical fiscal policy has a serious problem with

What is Economics?

Scarcity, Choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

What Macroeconomics Tries to Explain

Production, Income, and Employment

The Price Level and Inflation

The Classical Long run Model

Economic Growth and Rising Living Standards

Economic Fluctuations

The Short-run Macro Model

Money, Banks, and the Federal Reserve

The Money Market and Monetary Policy

Aggregate Demand and Aggregate Supply

Inflation and Monetary Policy

Exchange Rates and Macroeconomic Policy

Filters