Question 1

In the long run,

Accepted Answer

A)  fiscal policy has no effect on the labor force participation rate. 
B)  lower tax rates can lower the labor force participation rate. 
C)  less generous transfer payments can raise the labor force participation rate. 
D)  higher tax rates can raise the labor force participation rate. 
E)  None of the above. 
A)  fiscal policy has no effect on the labor force participation rate. 
B)  lower tax rates can lower the labor force participation rate. 
C)  less generous transfer payments can raise the labor force participation rate. 
D)  higher tax rates can raise the labor force participation rate. 
E)  None of the above.

Question 2

The national debt

Accepted Answer

A)  can be paid off without major economic effects 
B)  need never be paid off 
C)  is no more serious a problem than is a corporation's debt 
D)  should not exist during a period of economic prosperity 
E)  is the simple sum of post budget deficits 
A)  can be paid off without major economic effects 
B)  need never be paid off 
C)  is no more serious a problem than is a corporation's debt 
D)  should not exist during a period of economic prosperity 
E)  is the simple sum of post budget deficits

Question 3

The national debt

Accepted Answer

A)  will be zero when the federal budget is balanced. 
B)  has been shrinking in the last 30 years. 
C)  is equal to the government's budget deficit. 
D)  can grow without negative economic effects. 
E)  is a flow measure while the deficit is a stock measure. 
A)  will be zero when the federal budget is balanced. 
B)  has been shrinking in the last 30 years. 
C)  is equal to the government's budget deficit. 
D)  can grow without negative economic effects. 
E)  is a flow measure while the deficit is a stock measure.

Question 4

As of 2009,the U.S.federal deficit had reached nearly __________ of GDP.

Accepted Answer

A)  -3.0 percent 
B)  -6.0 percent 
C)  -12.0 percent 
D)  -5.0 percent. 
E)  -7.0 percent 
A)  -3.0 percent 
B)  -6.0 percent 
C)  -12.0 percent 
D)  -5.0 percent. 
E)  -7.0 percent

Question 5

Government expenditures are a subcategory of government outlays.

Accepted Answer

A) True 
 B)False

Question 6

The major reasons why economists have grown increasingly skeptical about countercyclical fiscal policy are

Accepted Answer

A)  irreversibility,forward looking behavior,and the reaction of the Federal Reserve. 
B)  irreversibility,forward looking behavior,and the negative effects of imports. 
C)  timing problems,irreversibility,and forward looking behavior, 
D)  timing problems,irreversibility,and the reaction of the Federal Reserve. 
E)  timing problems,irreversibility,forward looking behavior,and the reaction of the Federal Reserve. 
A)  irreversibility,forward looking behavior,and the reaction of the Federal Reserve. 
B)  irreversibility,forward looking behavior,and the negative effects of imports. 
C)  timing problems,irreversibility,and forward looking behavior, 
D)  timing problems,irreversibility,and the reaction of the Federal Reserve. 
E)  timing problems,irreversibility,forward looking behavior,and the reaction of the Federal Reserve.

Question 7

In the long run,

Accepted Answer

A)  higher consumption spending means a larger capital stock and a higher standard of living 
B)  higher investment spending means higher interest rates 
C)  higher investment spending means a larger capital stock and a higher standard of living 
D)  higher interest rates means higher consumption spending 
E)  higher government spending means a larger capital stock and a higher standard of living 
A)  higher consumption spending means a larger capital stock and a higher standard of living 
B)  higher investment spending means higher interest rates 
C)  higher investment spending means a larger capital stock and a higher standard of living 
D)  higher interest rates means higher consumption spending 
E)  higher government spending means a larger capital stock and a higher standard of living

Question 8

If the tax multiplier is -4.0,what is the marginal propensity to consume?

Accepted Answer

A)  0.66 
B)  0.75 
C)  0.50 
D)  0.80 
E)  0.25 
A)  0.66 
B)  0.75 
C)  0.50 
D)  0.80 
E)  0.25

Question 9

If net taxes increase by $100 billion and the marginal propensity to consume is 0.6,by how much will GDP change?

Accepted Answer

A)  -$250 billion 
B)  $150 billion 
C)  $250 billion 
D)  -$100 billion 
E)  -$150 billion 
A)  -$250 billion 
B)  $150 billion 
C)  $250 billion 
D)  -$100 billion 
E)  -$150 billion

Question 10

The cumulative total of the federal government's budget deficits has been greater than the total of its surpluses.

Accepted Answer

A) True 
 B)False

Question 11

The national debt must be paid back in the future.

Accepted Answer

A) True 
 B)False

Question 12

To judge the size of government debts and deficits,we should use real values.

Accepted Answer

A) True 
 B)False

Question 13

In the long run,

Accepted Answer

A)  a larger budget deficit means a larger money supply 
B)  lower investment spending means slower growth of the standard of living 
C)  a larger budget deficit means lower consumption spending 
D)  a larger budget surplus means a smaller capital stock 
E)  government spending has no effect on the budget deficit or surplus. 
A)  a larger budget deficit means a larger money supply 
B)  lower investment spending means slower growth of the standard of living 
C)  a larger budget deficit means lower consumption spending 
D)  a larger budget surplus means a smaller capital stock 
E)  government spending has no effect on the budget deficit or surplus.

Question 14

In the short run,the impact of a $50 billion tax package on GDP will be

Accepted Answer

A)  greater than $50 billion because of the multiplier effect 
B)  less than $50 billion because of the tax code 
C)  greater than $50 billion because of the tax code 
D)  exactly $50 billion 
E)  greater than $50 billion because of crowding out. 
A)  greater than $50 billion because of the multiplier effect 
B)  less than $50 billion because of the tax code 
C)  greater than $50 billion because of the tax code 
D)  exactly $50 billion 
E)  greater than $50 billion because of crowding out.

Question 15

From the 1960s through the 1990s military expenditures increased as a percentage of GDP and they were a major influence in the continued growth of government outlays.

Accepted Answer

A) True 
 B)False

In the long run,

The national debt

The national debt

As of 2009,the U.S.federal deficit had reached nearly __________ of GDP.

Government expenditures are a subcategory of government outlays.

The major reasons why economists have grown increasingly skeptical about countercyclical fiscal policy are

In the long run,

If the tax multiplier is -4.0,what is the marginal propensity to consume?

If net taxes increase by $100 billion and the marginal propensity to consume is 0.6,by how much will GDP change?

The cumulative total of the federal government's budget deficits has been greater than the total of its surpluses.

The national debt must be paid back in the future.

To judge the size of government debts and deficits,we should use real values.

In the long run,

In the short run,the impact of a $50 billion tax package on GDP will be

From the 1960s through the 1990s military expenditures increased as a percentage of GDP and they were a major influence in the continued growth of government outlays.

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

In the long run,

The national debt

The national debt

As of 2009,the U.S.federal deficit had reached nearly __________ of GDP.

Government expenditures are a subcategory of government outlays.

The major reasons why economists have grown increasingly skeptical about countercyclical fiscal policy are

In the long run,

If the tax multiplier is -4.0,what is the marginal propensity to consume?

If net taxes increase by $100 billion and the marginal propensity to consume is 0.6,by how much will GDP change?

The cumulative total of the federal government's budget deficits has been greater than the total of its surpluses.

The national debt must be paid back in the future.

To judge the size of government debts and deficits,we should use real values.

In the long run,

In the short run,the impact of a $50 billion tax package on GDP will be

From the 1960s through the 1990s military expenditures increased as a percentage of GDP and they were a major influence in the continued growth of government outlays.

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