Question 1

Compared to 1960, by how much did the share of outlays going to national defense drop in 2016?

Accepted Answer

A)  25 percent 
B)  15 percent 
C)  40 percent 
D)  50 percent 
E)  60 percent 
A)  25 percent 
B)  15 percent 
C)  40 percent 
D)  50 percent 
E)  60 percent

Question 2

The federal budget surplus recorded in 1998 resulted from a(n) _____

Accepted Answer

A)  decrease in taxes and a rapid growth in federal outlays. 
B)  increase in taxes and a sluggish growth in federal outlays. 
C)  decrease in taxes and a decrease in federal outlays. 
D)  increase in federal outlays and taxes. 
E)  increase in export earnings and a decrease in import bills. 
A)  decrease in taxes and a rapid growth in federal outlays. 
B)  increase in taxes and a sluggish growth in federal outlays. 
C)  decrease in taxes and a decrease in federal outlays. 
D)  increase in federal outlays and taxes. 
E)  increase in export earnings and a decrease in import bills.

Question 3

The public sector grew the most in Japan, rising from 35 percent relative to GDP in 1997 to 39 percent in 2016.

Accepted Answer

A) True 
 B)False

Question 4

U.S. government securities are the _____

Accepted Answer

A)  riskiest in the world. 
B)  safest in the world. 
C)  most expensive. 
D)  cheapest. 
E)  most controversial. 
A)  riskiest in the world. 
B)  safest in the world. 
C)  most expensive. 
D)  cheapest. 
E)  most controversial.

Question 5

A disadvantage of having an annually balanced budget is that government spending would have to _____

Accepted Answer

A)  allow the national debt to burgeon with chronic deficits. 
B)  decline during a recession to offset the increase in tax revenues. 
C)  rise during a recession to match the increase in tax revenues. 
D)  rise during an expansion to offset the decline in tax revenues. 
E)  decline in a recession to match the decrease in tax revenues. 
A)  allow the national debt to burgeon with chronic deficits. 
B)  decline during a recession to offset the increase in tax revenues. 
C)  rise during a recession to match the increase in tax revenues. 
D)  rise during an expansion to offset the decline in tax revenues. 
E)  decline in a recession to match the decrease in tax revenues.

Question 6

The federal budget deficit becomes _____ during recessions because _____.

Accepted Answer

A)  smaller; transfer payments increase and tax revenues decline 
B)  larger; transfer payments increase and tax revenues decline 
C)  larger; both transfer payments and tax revenues increase 
D)  smaller; both transfer payments and tax revenues increase 
E)  smaller; both transfer payments and tax revenues decrease 
A)  smaller; transfer payments increase and tax revenues decline 
B)  larger; transfer payments increase and tax revenues decline 
C)  larger; both transfer payments and tax revenues increase 
D)  smaller; both transfer payments and tax revenues increase 
E)  smaller; both transfer payments and tax revenues decrease

Question 7

According to Keynes' philosophy of government budgets, _____

Accepted Answer

A)  chronic deficits accumulate into a national debt. 
B)  permanent surpluses are desirable. 
C)  fiscal policy focuses on maintaining an annually balanced budget. 
D)  deficits dampen aggregate demand in the short run and reduce the federal debt. 
E)  deficits are appropriate during recessions. 
A)  chronic deficits accumulate into a national debt. 
B)  permanent surpluses are desirable. 
C)  fiscal policy focuses on maintaining an annually balanced budget. 
D)  deficits dampen aggregate demand in the short run and reduce the federal debt. 
E)  deficits are appropriate during recessions.

Question 8

A disadvantage of functional finance is that it _____

Accepted Answer

A)  does not focus on producing the potential level of output in an economy. 
B)  increases the level of unemployment during recessions. 
C)  lets chronic deficits magnify into a national debt, allowing them to reach an alarming level. 
D)  requires that the budget is balanced even during times of war. 
E)  magnifies fluctuations in the business cycle. 
A)  does not focus on producing the potential level of output in an economy. 
B)  increases the level of unemployment during recessions. 
C)  lets chronic deficits magnify into a national debt, allowing them to reach an alarming level. 
D)  requires that the budget is balanced even during times of war. 
E)  magnifies fluctuations in the business cycle.

Question 9

Discretionary policy deficits are associated with _____

Accepted Answer

A)  increases in national saving. 
B)  higher prices. 
C)  lower transfer payments. 
D)  lower interest rates. 
E)  higher taxes. 
A)  increases in national saving. 
B)  higher prices. 
C)  lower transfer payments. 
D)  lower interest rates. 
E)  higher taxes.

Question 10

The problem with a detailed federal government budget is that _____

Accepted Answer

A)  monetary policy becomes more difficult to implement. 
B)  it reduces the flexibility of discretionary fiscal policy. 
C)  Congress cannot keep it up to date. 
D)  there is a shortage of congressional committees that deal with the budget. 
E)  there is a short review period, resulting in poor choices in funding programs. 
A)  monetary policy becomes more difficult to implement. 
B)  it reduces the flexibility of discretionary fiscal policy. 
C)  Congress cannot keep it up to date. 
D)  there is a shortage of congressional committees that deal with the budget. 
E)  there is a short review period, resulting in poor choices in funding programs.

Question 11

What does the term flight to quality refer to?

Accepted Answer

A)  money flowing out of debt securities that are riskier than other investments. 
B)  money flowing out of from debt securities that are safer than other investments. 
C)  money flowing into debt securities that are riskier than other investments. 
D)  money flowing into debt securities that are safer than other investments. 
E)  an expensive NASA program. 
A)  money flowing out of debt securities that are riskier than other investments. 
B)  money flowing out of from debt securities that are safer than other investments. 
C)  money flowing into debt securities that are riskier than other investments. 
D)  money flowing into debt securities that are safer than other investments. 
E)  an expensive NASA program.

Question 12

In 2009, the U.S. budget deficit was $1.4 trillion.

Accepted Answer

A) True 
 B)False

Question 13

Foreigners who buy U.S. Treasury securities forgo _____ and are paid back in _____.

Accepted Answer

A)  future consumption; the future 
B)  present consumption; the future 
C)  present consumption; the present 
D)  earnings; debt 
A)  future consumption; the future 
B)  present consumption; the future 
C)  present consumption; the present 
D)  earnings; debt

Question 14

Budget agreements that allow agencies, in the absence of an approved budget, to spend at the rate of the previous year's budget are known as _____

Accepted Answer

A)  continuing resolutions. 
B)  budget resolutions. 
C)  disclaimer votes. 
D)  filibusters. 
E)  stimulus plans. 
A)  continuing resolutions. 
B)  budget resolutions. 
C)  disclaimer votes. 
D)  filibusters. 
E)  stimulus plans.

Question 15

Which of the following components of aggregate expenditure is most subject to crowding out?

Accepted Answer

A)  consumption expenditures 
B)  investment spending 
C)  imports 
D)  government purchases of goods and services 
E)  national saving 
A)  consumption expenditures 
B)  investment spending 
C)  imports 
D)  government purchases of goods and services 
E)  national saving

Question 16

Because of automatic stabilizers, _____

Accepted Answer

A)  fiscal policy focuses on maintaining an annually balanced budget. 
B)  planning discretionary fiscal measures to reduce economic fluctuations is easy. 
C)  government budget deficits are zero if averaged out over the entire business cycle. 
D)  policy makers should be concerned less with balancing the budget annually. 
E)  government budget deficits are smaller during expansions and larger during contractions. 
A)  fiscal policy focuses on maintaining an annually balanced budget. 
B)  planning discretionary fiscal measures to reduce economic fluctuations is easy. 
C)  government budget deficits are zero if averaged out over the entire business cycle. 
D)  policy makers should be concerned less with balancing the budget annually. 
E)  government budget deficits are smaller during expansions and larger during contractions.

Question 17

During a recession, higher welfare outlays _____

Accepted Answer

A)  increase the size of the budget deficit even if the government does not undertake discretionary fiscal policy. 
B)  decrease the size of the budget deficit regardless of the government's discretionary fiscal policy. 
C)  increase the size of the budget deficit only if the government undertakes discretionary fiscal policy. 
D)  decrease the size of the budget deficit only if the government undertakes discretionary fiscal policy. 
E)  have the same effect on the budget deficit as they do in times of expansion. 
A)  increase the size of the budget deficit even if the government does not undertake discretionary fiscal policy. 
B)  decrease the size of the budget deficit regardless of the government's discretionary fiscal policy. 
C)  increase the size of the budget deficit only if the government undertakes discretionary fiscal policy. 
D)  decrease the size of the budget deficit only if the government undertakes discretionary fiscal policy. 
E)  have the same effect on the budget deficit as they do in times of expansion.

Question 18

If the government decreased urban welfare payments by a dollar for every dollar increase in farm subsidies, which of the following is the likely net effect?

Accepted Answer

A)  an increase in the budget deficit, because government spending has increased 
B)  a decrease in the budget deficit, because transfer payments are not included in the government's budget 
C)  an increase in the budget deficit, because transfer payments have increased 
D)  an increase in the budget deficit, because farm subsidies are transfer payments but urban welfare payments are not 
E)  no change in the budget deficit 
A)  an increase in the budget deficit, because government spending has increased 
B)  a decrease in the budget deficit, because transfer payments are not included in the government's budget 
C)  an increase in the budget deficit, because transfer payments have increased 
D)  an increase in the budget deficit, because farm subsidies are transfer payments but urban welfare payments are not 
E)  no change in the budget deficit

Question 19

If a budget deficit is the result of expenditures for programs such as farm subsidies and Social Security, the burden on future generations is slight.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is true of the federal budget process in the United States?

Accepted Answer

A)  Congress must approve a budget with at least a two-thirds majority vote. 
B)  The federal budget must be balanced each year because the volume of international trade reduces if the government has a surplus or a deficit. 
C)  Most federal outlays are determined by existing laws. 
D)  Congress approves a budget that separates the capital budget from the operating budget. 
E)  Detailed budgeting allows the party in power to reward its supporters. 
A)  Congress must approve a budget with at least a two-thirds majority vote. 
B)  The federal budget must be balanced each year because the volume of international trade reduces if the government has a surplus or a deficit. 
C)  Most federal outlays are determined by existing laws. 
D)  Congress approves a budget that separates the capital budget from the operating budget. 
E)  Detailed budgeting allows the party in power to reward its supporters.

Compared to 1960, by how much did the share of outlays going to national defense drop in 2016?

The federal budget surplus recorded in 1998 resulted from a(n) _____

The public sector grew the most in Japan, rising from 35 percent relative to GDP in 1997 to 39 percent in 2016.

U.S. government securities are the _____

A disadvantage of having an annually balanced budget is that government spending would have to _____

The federal budget deficit becomes _ during recessions because _.

According to Keynes' philosophy of government budgets, _____

A disadvantage of functional finance is that it _____

Discretionary policy deficits are associated with _____

The problem with a detailed federal government budget is that _____

What does the term flight to quality refer to?

In 2009, the U.S. budget deficit was $1.4 trillion.

Foreigners who buy U.S. Treasury securities forgo _ and are paid back in _.

Budget agreements that allow agencies, in the absence of an approved budget, to spend at the rate of the previous year's budget are known as _____

Which of the following components of aggregate expenditure is most subject to crowding out?

Because of automatic stabilizers, _____

During a recession, higher welfare outlays _____

If the government decreased urban welfare payments by a dollar for every dollar increase in farm subsidies, which of the following is the likely net effect?

If a budget deficit is the result of expenditures for programs such as farm subsidies and Social Security, the burden on future generations is slight.

Which of the following is true of the federal budget process in the United States?

The Art and Science of Economic Analysis.

Economic Tools and Economic Systems.

Economic Decision Makers.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

Productivity and Growth.

Aggregate Demand.

Aggregate Supply.

Fiscal Policy.

Money and the Financial System.

Banking and the Money Supply.

Monetary Theory and Policy.

Macro Policy Debate: Active or Passive?

International Trade.

International Finance.

Economic Development.

Filters

Exam 12: Federal Budgets and Public Policy.

Compared to 1960, by how much did the share of outlays going to national defense drop in 2016?

The federal budget surplus recorded in 1998 resulted from a(n) _____

The public sector grew the most in Japan, rising from 35 percent relative to GDP in 1997 to 39 percent in 2016.

U.S. government securities are the _____

A disadvantage of having an annually balanced budget is that government spending would have to _____

The federal budget deficit becomes _____ during recessions because _____.

According to Keynes' philosophy of government budgets, _____

A disadvantage of functional finance is that it _____

Discretionary policy deficits are associated with _____

The problem with a detailed federal government budget is that _____

What does the term flight to quality refer to?

In 2009, the U.S. budget deficit was $1.4 trillion.

Foreigners who buy U.S. Treasury securities forgo _____ and are paid back in _____.

Budget agreements that allow agencies, in the absence of an approved budget, to spend at the rate of the previous year's budget are known as _____

Which of the following components of aggregate expenditure is most subject to crowding out?

Because of automatic stabilizers, _____

During a recession, higher welfare outlays _____

If the government decreased urban welfare payments by a dollar for every dollar increase in farm subsidies, which of the following is the likely net effect?

If a budget deficit is the result of expenditures for programs such as farm subsidies and Social Security, the burden on future generations is slight.

Which of the following is true of the federal budget process in the United States?

The Art and Science of Economic Analysis.

Economic Tools and Economic Systems.

Economic Decision Makers.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

Productivity and Growth.

Aggregate Demand.

Aggregate Supply.

Fiscal Policy.

Money and the Financial System.

Banking and the Money Supply.

Monetary Theory and Policy.

Macro Policy Debate: Active or Passive?

International Trade.

International Finance.

Economic Development.

Filters

The federal budget deficit becomes _ during recessions because _.

Foreigners who buy U.S. Treasury securities forgo _ and are paid back in _.