Question 1

If the government decides to change the level of government spending,what happens to the value of the multiplier?

Accepted Answer

A)  It becomes larger. 
B)  It becomes smaller. 
C)  It does not change. 
D)  It is impossible to predict. 
A)  It becomes larger. 
B)  It becomes smaller. 
C)  It does not change. 
D)  It is impossible to predict.

Question 2

Productivity increases,brought about by increased education and training,may shift the aggregate supply curve outward.

Accepted Answer

A) True 
 B)False

Question 3

Reductions in the personal income tax,often advocated by supply-siders to increase labor supply and effort,can be expected to also

Accepted Answer

A)  decrease consumption spending. 
B)  increase consumption spending. 
C)  decrease investment spending. 
D)  increase export sales. 
A)  decrease consumption spending. 
B)  increase consumption spending. 
C)  decrease investment spending. 
D)  increase export sales.

Question 4

A one-dollar tax reduction has the same effect as a one-dollar increase in government purchases.

Accepted Answer

A) True 
 B)False

Question 5

Explain why a change in income tax rates causes the consumption schedule to change slope.

Accepted Answer

An income tax rate determines the portio

Question 6

When you compare the effects of government spending on aggregate demand with the effects of taxes on aggregate demand,the effects of government spending are

Accepted Answer

A)  smaller. 
B)  larger. 
C)  the same. 
D)  impossible to predict. 
A)  smaller. 
B)  larger. 
C)  the same. 
D)  impossible to predict.

Question 7

The primary goal of supply-side economics is to

Accepted Answer

A)  balance the federal budget. 
B)  reduce the balance of payments deficit. 
C)  reduce the money supply. 
D)  reduce inflation and increase growth at the same time. 
A)  balance the federal budget. 
B)  reduce the balance of payments deficit. 
C)  reduce the money supply. 
D)  reduce inflation and increase growth at the same time.

Question 8

The multiplier is increased when income taxes are included.

Accepted Answer

A) True 
 B)False

Question 9

Why does the numerical value of the multiplier fall when an income tax is added to the income-expenditure model?

Accepted Answer

An income tax causes a portion of any in

Question 10

Figure 11-2
  
-Which graph in Figure 11-2 best reflects a Keynesian view of the impact of a $500-per-person tax cut?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 11

Government purchases and income taxes have the same effect on the multiplier.

Accepted Answer

A) True 
 B)False

Question 12

Critics of supply-side economics argue that tax cuts favored by supply-siders will have the greatest effect on

Accepted Answer

A)  aggregate supply. 
B)  tax receipts. 
C)  aggregate demand. 
D)  the money supply. 
A)  aggregate supply. 
B)  tax receipts. 
C)  aggregate demand. 
D)  the money supply.

Question 13

Fiscal policy is the use of taxes and spending by the government to affect aggregate demand.

Accepted Answer

A) True 
 B)False

Question 14

In 20091,President Obama and Congress stimulated aggregate demand by

Accepted Answer

A)  increasing taxes and government spending. 
B)  decreasing taxes and government spending. 
C)  increasing taxes and decreasing government spending. 
D)  decreasing taxes and increasing government spending. 
A)  increasing taxes and government spending. 
B)  decreasing taxes and government spending. 
C)  increasing taxes and decreasing government spending. 
D)  decreasing taxes and increasing government spending.

Question 15

Critics of supply-side economics argue that a major flaw is

Accepted Answer

A)  the small magnitude of supply-side effects. 
B)  the large size of demand-side effects. 
C)  increased income inequality. 
D)  All of the above. 
A)  the small magnitude of supply-side effects. 
B)  the large size of demand-side effects. 
C)  increased income inequality. 
D)  All of the above.

Question 16

The government's fiscal policy is its plan to influence aggregate demand by changing

Accepted Answer

A)  the money supply. 
B)  minimum wage levels. 
C)  sales taxes. 
D)  taxation and spending. 
A)  the money supply. 
B)  minimum wage levels. 
C)  sales taxes. 
D)  taxation and spending.

Question 17

The main idea behind supply-side tax cuts is that

Accepted Answer

A)  tax cuts increase spending, which increases aggregate supply. 
B)  some tax cuts can increase aggregate supply. 
C)  people like lower taxes and will spend more if they get them. 
D)  it is easier to shift aggregate supply than aggregate demand. 
A)  tax cuts increase spending, which increases aggregate supply. 
B)  some tax cuts can increase aggregate supply. 
C)  people like lower taxes and will spend more if they get them. 
D)  it is easier to shift aggregate supply than aggregate demand.

Question 18

Figure 11-1
  
-In Figure 11-1,to reach the level of potential GDP,the administration of President Obama would most likely advocate

Accepted Answer

A)  increasing Social Security payments. 
B)  decreasing defense spending. 
C)  decreasing personal income taxes. 
D)  All of the above are correct. 
A)  increasing Social Security payments. 
B)  decreasing defense spending. 
C)  decreasing personal income taxes. 
D)  All of the above are correct.

Question 19

A major complication with fiscal policy to control aggregate demand is the

Accepted Answer

A)  inability to agree on macroeconomic goals. 
B)  accuracy of modern forecasting models. 
C)  inability to change aggregate demand with fiscal tools. 
D)  constantly changing investment and net exports because of other events. 
A)  inability to agree on macroeconomic goals. 
B)  accuracy of modern forecasting models. 
C)  inability to change aggregate demand with fiscal tools. 
D)  constantly changing investment and net exports because of other events.

Question 20

If all fixed taxes in the United States were removed and only variable taxes remained,what would be the effect on the expenditures schedule?

Accepted Answer

A)  The expenditure schedule will shift upward. 
B)  The expenditure schedule will shift downward. 
C)  The expenditure schedule will become flatter. 
D)  The expenditure schedule will become steeper. 
A)  The expenditure schedule will shift upward. 
B)  The expenditure schedule will shift downward. 
C)  The expenditure schedule will become flatter. 
D)  The expenditure schedule will become steeper.

If the government decides to change the level of government spending,what happens to the value of the multiplier?

Productivity increases,brought about by increased education and training,may shift the aggregate supply curve outward.

Reductions in the personal income tax,often advocated by supply-siders to increase labor supply and effort,can be expected to also

A one-dollar tax reduction has the same effect as a one-dollar increase in government purchases.

Explain why a change in income tax rates causes the consumption schedule to change slope.

When you compare the effects of government spending on aggregate demand with the effects of taxes on aggregate demand,the effects of government spending are

The primary goal of supply-side economics is to

The multiplier is increased when income taxes are included.

Why does the numerical value of the multiplier fall when an income tax is added to the income-expenditure model?

Figure 11-2 -Which graph in Figure 11-2 best reflects a Keynesian view of the impact of a $500-per-person tax cut?

Government purchases and income taxes have the same effect on the multiplier.

Critics of supply-side economics argue that tax cuts favored by supply-siders will have the greatest effect on

Fiscal policy is the use of taxes and spending by the government to affect aggregate demand.

In 20091,President Obama and Congress stimulated aggregate demand by

Critics of supply-side economics argue that a major flaw is

The government's fiscal policy is its plan to influence aggregate demand by changing

The main idea behind supply-side tax cuts is that

Figure 11-1 -In Figure 11-1,to reach the level of potential GDP,the administration of President Obama would most likely advocate

A major complication with fiscal policy to control aggregate demand is the

If all fixed taxes in the United States were removed and only variable taxes remained,what would be the effect on the expenditures schedule?

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

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Exam 11: Managing Aggregate Demand: Fiscal Policy

If the government decides to change the level of government spending,what happens to the value of the multiplier?

Productivity increases,brought about by increased education and training,may shift the aggregate supply curve outward.

Reductions in the personal income tax,often advocated by supply-siders to increase labor supply and effort,can be expected to also

A one-dollar tax reduction has the same effect as a one-dollar increase in government purchases.

Explain why a change in income tax rates causes the consumption schedule to change slope.

When you compare the effects of government spending on aggregate demand with the effects of taxes on aggregate demand,the effects of government spending are

The primary goal of supply-side economics is to

The multiplier is increased when income taxes are included.

Why does the numerical value of the multiplier fall when an income tax is added to the income-expenditure model?

Figure 11-2 -Which graph in Figure 11-2 best reflects a Keynesian view of the impact of a $500-per-person tax cut?

Government purchases and income taxes have the same effect on the multiplier.

Critics of supply-side economics argue that tax cuts favored by supply-siders will have the greatest effect on

Fiscal policy is the use of taxes and spending by the government to affect aggregate demand.

In 20091,President Obama and Congress stimulated aggregate demand by

Critics of supply-side economics argue that a major flaw is

The government's fiscal policy is its plan to influence aggregate demand by changing

The main idea behind supply-side tax cuts is that

Figure 11-1 -In Figure 11-1,to reach the level of potential GDP,the administration of President Obama would most likely advocate

A major complication with fiscal policy to control aggregate demand is the

If all fixed taxes in the United States were removed and only variable taxes remained,what would be the effect on the expenditures schedule?

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

Filters