Question 1

Ceteris paribus, the greater the foreign holdings of the U.S. treasury securities:

Accepted Answer

A)  the lower the value of the U.S. dollar in the foreign exchange market. 
B)  the higher the interest rate in the U.S. 
C)  the greater the level of U.S. imports. 
D)  the lower the wealth of the U.S. citizens. 
E)  the lower the tax rate in the U.S. economy. 
A)  the lower the value of the U.S. dollar in the foreign exchange market. 
B)  the higher the interest rate in the U.S. 
C)  the greater the level of U.S. imports. 
D)  the lower the wealth of the U.S. citizens. 
E)  the lower the tax rate in the U.S. economy.

Question 2

Which of the following trends has been observed in federal revenues and expenditures over time?

Accepted Answer

A)  Expenditures were lower than the revenues in the 1998-2001 period. 
B)  Expenditures were lower than the revenues in the 1930s. 
C)  Expenditures were higher than the revenues in the 1998-2001 period. 
D)  Expenditures were more or less equal to the revenues in the 1930s. 
E)  Expenditures were more or less equal to the revenues in the 1998-2001 period. 
A)  Expenditures were lower than the revenues in the 1998-2001 period. 
B)  Expenditures were lower than the revenues in the 1930s. 
C)  Expenditures were higher than the revenues in the 1998-2001 period. 
D)  Expenditures were more or less equal to the revenues in the 1930s. 
E)  Expenditures were more or less equal to the revenues in the 1998-2001 period.

Question 3

Which of the following can be categorized under fiscal policy?

Accepted Answer

A)  Increase in money supply 
B)  Decrease in money supply 
C)  Increase in federal funds rate 
D)  Decrease in reserve requirement 
E)  Increase in tax rates 
A)  Increase in money supply 
B)  Decrease in money supply 
C)  Increase in federal funds rate 
D)  Decrease in reserve requirement 
E)  Increase in tax rates

Question 4

Identify the industrial country that spends 43 percent of its budget on social security, health, and education programs.

Accepted Answer

A)  China 
B)  India 
C)  Brazil 
D)  Russia 
E)  The United States 
A)  China 
B)  India 
C)  Brazil 
D)  Russia 
E)  The United States

Question 5

Suppose the equilibrium level of income exceeds the full employment level of income and there is high inflation. Hence, the government decides to implement a fiscal policy that will act to reduce national output and prices. This can be accomplished by:

Accepted Answer

A)  increasing government spending such that aggregate expenditures are increased. 
B)  raising taxes and government spending by the same amount such that aggregate supply is decreased and aggregate demand is increased. 
C)  decreasing government spending such that aggregate demand is reduced. 
D)  lowering average tax rates such that aggregate supply is increased. 
E)  increasing transfer payments such that aggregate expenditures decline. 
A)  increasing government spending such that aggregate expenditures are increased. 
B)  raising taxes and government spending by the same amount such that aggregate supply is decreased and aggregate demand is increased. 
C)  decreasing government spending such that aggregate demand is reduced. 
D)  lowering average tax rates such that aggregate supply is increased. 
E)  increasing transfer payments such that aggregate expenditures decline.

Question 6

Increased domestic imports and higher international trade deficits are possible results of government surpluses.

Accepted Answer

A) True 
 B)False

Question 7

According to Ricardian equivalence, taxation and government borrowing have the same effect on spending in the private sector.

Accepted Answer

A) True 
 B)False

Question 8

If aggregate demand intersects aggregate supply in the horizontal range of the aggregate supply curve, then, other things equal, an increase in government spending will:

Accepted Answer

A)  raise real GDP by the amount indicated by the government spending multiplier and leave the price level unchanged. 
B)  lower real GDP by an amount equal to the increased spending and reduce inflation. 
C)  raise the price level and leave real GDP unchanged. 
D)  raise both real GDP and the price level by a multiple of the initial spending increase. 
E)  have no effect on real GDP or the price level, because all private investment will be crowded out. 
A)  raise real GDP by the amount indicated by the government spending multiplier and leave the price level unchanged. 
B)  lower real GDP by an amount equal to the increased spending and reduce inflation. 
C)  raise the price level and leave real GDP unchanged. 
D)  raise both real GDP and the price level by a multiple of the initial spending increase. 
E)  have no effect on real GDP or the price level, because all private investment will be crowded out.

Question 9

The reduction in the U.S. government deficit in the early 1990s was the result of strong economic growth.

Accepted Answer

A) True 
 B)False

Question 10

The emphasis on the greater incentives to produce, created by lower taxes, has come to be known as:

Accepted Answer

A)  the trickle-down economics. 
B)  the supply-side economics. 
C)  the paradox of thrift. 
D)  the permanent income hypothesis. 
E)  monetarism. 
A)  the trickle-down economics. 
B)  the supply-side economics. 
C)  the paradox of thrift. 
D)  the permanent income hypothesis. 
E)  monetarism.

Question 11

Which of the following correctly explain Ricardian equivalence?

Accepted Answer

A)  Government spending that is financed by borrowing has a smaller effect on the economy than government spending financed by raising taxes. 
B)  Consumers do not base current spending on future expected tax liabilities. 
C)  Government borrowing can function like increased current taxes, reducing current household and business expenditures. 
D)  The government should balance its budget by equating revenue and expenditure in every fiscal year. 
E)  Government spending does not crowd out private investment. 
A)  Government spending that is financed by borrowing has a smaller effect on the economy than government spending financed by raising taxes. 
B)  Consumers do not base current spending on future expected tax liabilities. 
C)  Government borrowing can function like increased current taxes, reducing current household and business expenditures. 
D)  The government should balance its budget by equating revenue and expenditure in every fiscal year. 
E)  Government spending does not crowd out private investment.

Question 12

The figure given below depicts the tax revenue for different tax rates applied by the government.?Figure 11.2
  
-Which of the following is depicted in Figure 11.2?

Accepted Answer

A)  The Lorenz curve 
B)  The community indifference curve 
C)  The aggregate labor supply curve 
D)  The Laffer curve 
E)  The Engel curve 
A)  The Lorenz curve 
B)  The community indifference curve 
C)  The aggregate labor supply curve 
D)  The Laffer curve 
E)  The Engel curve

Question 13

Which of the following is true of fiscal policy before the Great Depression of the 1930s?

Accepted Answer

A)  Fiscal policy was made at the federal level. 
B)  Policies associated with national defense were made at the state level. 
C)  Environmental degradation and education were the focus areas of the federal government while other areas of government policy were dealt by individual states. 
D)  The federal budget was determined mostly by economists and not by politicians. 
E)  National defense and foreign trade were the focus areas of the federal government while other areas of government policy were dealt by individual states. 
A)  Fiscal policy was made at the federal level. 
B)  Policies associated with national defense were made at the state level. 
C)  Environmental degradation and education were the focus areas of the federal government while other areas of government policy were dealt by individual states. 
D)  The federal budget was determined mostly by economists and not by politicians. 
E)  National defense and foreign trade were the focus areas of the federal government while other areas of government policy were dealt by individual states.

Question 14

Ricardian equivalence can be said to hold if:

Accepted Answer

A)  taxation has greater effect on private spending than government borrowing. 
B)  taxation has a lesser effect on private spending than government borrowing. 
C)  government borrowing does not affect private consumption while taxation has a negative impact on private consumption. 
D)  government spending activities financed by taxation and those financed by borrowing have the same effect on private spending. 
E)  government spending activities financed by taxation and those financed by borrowing have no effect on private spending. 
A)  taxation has greater effect on private spending than government borrowing. 
B)  taxation has a lesser effect on private spending than government borrowing. 
C)  government borrowing does not affect private consumption while taxation has a negative impact on private consumption. 
D)  government spending activities financed by taxation and those financed by borrowing have the same effect on private spending. 
E)  government spending activities financed by taxation and those financed by borrowing have no effect on private spending.

Ceteris paribus, the greater the foreign holdings of the U.S. treasury securities:

Which of the following trends has been observed in federal revenues and expenditures over time?

Which of the following can be categorized under fiscal policy?

Identify the industrial country that spends 43 percent of its budget on social security, health, and education programs.

Suppose the equilibrium level of income exceeds the full employment level of income and there is high inflation. Hence, the government decides to implement a fiscal policy that will act to reduce national output and prices. This can be accomplished by:

Increased domestic imports and higher international trade deficits are possible results of government surpluses.

According to Ricardian equivalence, taxation and government borrowing have the same effect on spending in the private sector.

If aggregate demand intersects aggregate supply in the horizontal range of the aggregate supply curve, then, other things equal, an increase in government spending will:

The reduction in the U.S. government deficit in the early 1990s was the result of strong economic growth.

The emphasis on the greater incentives to produce, created by lower taxes, has come to be known as:

Which of the following correctly explain Ricardian equivalence?

The figure given below depicts the tax revenue for different tax rates applied by the government.?Figure 11.2 -Which of the following is depicted in Figure 11.2?

Which of the following is true of fiscal policy before the Great Depression of the 1930s?

Ricardian equivalence can be said to hold if:

The Wealth of Nations: Ownership and Economic Freedom

Scarcity and Opportunity Costs

The Market and Price System

The Aggregate Economy

National Income Accounting

An Introduction to the Foreign Exchapterange Market and the Balance of Payments

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Aggregate Expenditures

Income and Expenditures Equilibrium

Money and Banking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

Economic Growth

Development Economics

Globalization

World Trade Equilibrium

International Trade Restrictions

Exchapterange Rates and Financial Links Between Countries

Filters

Exam 11: Fiscal Policy

Ceteris paribus, the greater the foreign holdings of the U.S. treasury securities:

Which of the following trends has been observed in federal revenues and expenditures over time?

Which of the following can be categorized under fiscal policy?

Identify the industrial country that spends 43 percent of its budget on social security, health, and education programs.

Suppose the equilibrium level of income exceeds the full employment level of income and there is high inflation. Hence, the government decides to implement a fiscal policy that will act to reduce national output and prices. This can be accomplished by:

Increased domestic imports and higher international trade deficits are possible results of government surpluses.

According to Ricardian equivalence, taxation and government borrowing have the same effect on spending in the private sector.

If aggregate demand intersects aggregate supply in the horizontal range of the aggregate supply curve, then, other things equal, an increase in government spending will:

The reduction in the U.S. government deficit in the early 1990s was the result of strong economic growth.

The emphasis on the greater incentives to produce, created by lower taxes, has come to be known as:

Which of the following correctly explain Ricardian equivalence?

The figure given below depicts the tax revenue for different tax rates applied by the government.?Figure 11.2 -Which of the following is depicted in Figure 11.2?

Which of the following is true of fiscal policy before the Great Depression of the 1930s?

Ricardian equivalence can be said to hold if:

The Wealth of Nations: Ownership and Economic Freedom

Scarcity and Opportunity Costs

The Market and Price System

The Aggregate Economy

National Income Accounting

An Introduction to the Foreign Exchapterange Market and the Balance of Payments

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Aggregate Expenditures

Income and Expenditures Equilibrium

Money and Banking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

Economic Growth

Development Economics

Globalization

World Trade Equilibrium

International Trade Restrictions

Exchapterange Rates and Financial Links Between Countries

Filters