Question 1

An annually balanced budget _____

Accepted Answer

A)  is the surest path to economic stability. 
B)  is mandated by the U.S. Constitution. 
C)  dampens cyclical swings by decreasing government spending during expansions and increasing it during recessions. 
D)  accentuates cyclical swings by increasing government spending during expansions and reducing it during recessions. 
E)  is a goal that has only been achieved twice in the past 5 years. 
A)  is the surest path to economic stability. 
B)  is mandated by the U.S. Constitution. 
C)  dampens cyclical swings by decreasing government spending during expansions and increasing it during recessions. 
D)  accentuates cyclical swings by increasing government spending during expansions and reducing it during recessions. 
E)  is a goal that has only been achieved twice in the past 5 years.

Question 2

Problems with the federal government budget process include _____

Accepted Answer

A)  budgeting that allows the president too much discretion in spending decisions. 
B)  budgeting that increases the flexibility of discretionary fiscal policy. 
C)  a budget outline that needs to be approved with at least a two-thirds majority vote. 
D)  most of the expenditures being for entitlement programs. 
E)  a brief budgeting period that does not allow Congress to study whether the budget is an appropriate tool for fiscal policy. 
A)  budgeting that allows the president too much discretion in spending decisions. 
B)  budgeting that increases the flexibility of discretionary fiscal policy. 
C)  a budget outline that needs to be approved with at least a two-thirds majority vote. 
D)  most of the expenditures being for entitlement programs. 
E)  a brief budgeting period that does not allow Congress to study whether the budget is an appropriate tool for fiscal policy.

Question 3

What was the size of the federal budget in 2016?

Accepted Answer

A)  $2 trillion per year 
B)  $2.5 trillion per year 
C)  $3.8 trillion per year 
D)  $4.7 trillion per year 
E)  over $5 trillion per year 
A)  $2 trillion per year 
B)  $2.5 trillion per year 
C)  $3.8 trillion per year 
D)  $4.7 trillion per year 
E)  over $5 trillion per year

Question 4

Because deadlines are frequently missed, budgets typically run from year to year based on _____

Accepted Answer

A)  continuing resolutions. 
B)  budget resolutions. 
C)  congressional suggestions. 
D)  the suggestions of the president. 
E)  the suggestions of the president's Council of Economic Advisers. 
A)  continuing resolutions. 
B)  budget resolutions. 
C)  congressional suggestions. 
D)  the suggestions of the president. 
E)  the suggestions of the president's Council of Economic Advisers.

Question 5

The U.S. government's fiscal year extends from _____

Accepted Answer

A)  January to December. 
B)  April of one year to March of the next year. 
C)  June of one year to May of the next year. 
D)  September of one year to August of the next year. 
E)  October of one year to September of the next year. 
A)  January to December. 
B)  April of one year to March of the next year. 
C)  June of one year to May of the next year. 
D)  September of one year to August of the next year. 
E)  October of one year to September of the next year.

Question 6

If U.S. interest rates are higher than the world interest rates, we would expect the U.S. dollar to appreciate.

Accepted Answer

A) True 
 B)False

Question 7

If the deficit is increasing because of the effects of automatic stabilizers, _____

Accepted Answer

A)  the budget is annually balanced. 
B)  the economy is contracting. 
C)  the annual budget deficit has approached zero. 
D)  the budget is cyclically balanced. 
E)  the economy is growing. 
A)  the budget is annually balanced. 
B)  the economy is contracting. 
C)  the annual budget deficit has approached zero. 
D)  the budget is cyclically balanced. 
E)  the economy is growing.

Question 8

What happens to deficits during recessions?

Accepted Answer

A)  They increase, because tax revenues decline while spending programs increase. 
B)  They decrease, because tax revenues decline while spending programs decrease. 
C)  They increase, because personal income and corporate profits increase, boosting tax revenue. 
D)  They decrease because personal income and corporate profits increase, boosting tax revenue. 
E)  They decrease during recessions and increase during expansions. 
A)  They increase, because tax revenues decline while spending programs increase. 
B)  They decrease, because tax revenues decline while spending programs decrease. 
C)  They increase, because personal income and corporate profits increase, boosting tax revenue. 
D)  They decrease because personal income and corporate profits increase, boosting tax revenue. 
E)  They decrease during recessions and increase during expansions.

Question 9

The Economic Report of the President is prepared by _____

Accepted Answer

A)  the president. 
B)  Congress. 
C)  the Office of Management and Budget. 
D)  the Council of Economic Advisers. 
E)  the Secretary of the Treasury. 
A)  the president. 
B)  Congress. 
C)  the Office of Management and Budget. 
D)  the Council of Economic Advisers. 
E)  the Secretary of the Treasury.

Question 10

According to the budget philosophy of functional finance, _____

Accepted Answer

A)  the budget should be balanced annually. 
B)  surpluses should be run during periods of prosperity and deficits should be run during recessions. 
C)  the government budget should be whatever is necessary to have an economy operate at potential GDP. 
D)  the budget should never be in balance. 
E)  the rate of growth in the national debt should equal the rate of growth in the money supply. 
A)  the budget should be balanced annually. 
B)  surpluses should be run during periods of prosperity and deficits should be run during recessions. 
C)  the government budget should be whatever is necessary to have an economy operate at potential GDP. 
D)  the budget should never be in balance. 
E)  the rate of growth in the national debt should equal the rate of growth in the money supply.

Question 11

The Budget of the United States Government is officially submitted by _____

Accepted Answer

A)  the president to Congress and contains spending and revenue proposals for the upcoming fiscal year. 
B)  Congress to the president and contains spending and revenue proposals for the upcoming fiscal year. 
C)  the president to Congress and contains proposals for monetary policy. 
D)  Congress to the president and contains proposals for fiscal policy. 
E)  the president to Congress and is reviewed by the Supreme Court. 
A)  the president to Congress and contains spending and revenue proposals for the upcoming fiscal year. 
B)  Congress to the president and contains spending and revenue proposals for the upcoming fiscal year. 
C)  the president to Congress and contains proposals for monetary policy. 
D)  Congress to the president and contains proposals for fiscal policy. 
E)  the president to Congress and is reviewed by the Supreme Court.

Question 12

A(n) _____ is a budget philosophy that was followed prior to the Great Depression and aimed to match annual revenues with outlays, except during wartime.

Accepted Answer

A)  annually balanced budget 
B)  annual surplus budget 
C)  biennial deficit budget 
D)  biennially balanced budget 
E)  cyclically balanced budget 
A)  annually balanced budget 
B)  annual surplus budget 
C)  biennial deficit budget 
D)  biennially balanced budget 
E)  cyclically balanced budget

Question 13

U.S. Treasury securities are considered the safest in the world because _____

Accepted Answer

A)  they carry the highest interest rate. 
B)  they carry the highest risk. 
C)  they are backed by the U.S. government. 
D)  they are backed by foreign buyers of U.S. debt. 
E)  of previous defaults on national debt. 
A)  they carry the highest interest rate. 
B)  they carry the highest risk. 
C)  they are backed by the U.S. government. 
D)  they are backed by foreign buyers of U.S. debt. 
E)  of previous defaults on national debt.

Question 14

The long-run opportunity cost of government spending that crowds out private investment _____

Accepted Answer

A)  equals about 10 percent of GDP. 
B)  lowers interest rates and results in lower-interest income for U.S. resource owners. 
C)  would be greater if the government's expenditures were invested in building better highways and a more educated workforce. 
D)  results from the corresponding contractionary gap. 
E)  would be greater if the government's expenditures were devoted to increasing retirement benefits rather than educating the work force. 
A)  equals about 10 percent of GDP. 
B)  lowers interest rates and results in lower-interest income for U.S. resource owners. 
C)  would be greater if the government's expenditures were invested in building better highways and a more educated workforce. 
D)  results from the corresponding contractionary gap. 
E)  would be greater if the government's expenditures were devoted to increasing retirement benefits rather than educating the work force.

Question 15

A spike in "All Other Outlays" of the federal government in 2009 was due to _____

Accepted Answer

A)  an increase in the financial aid given to Greece earlier that year. 
B)  an increase in expenditures on Social Security and Medicare. 
C)  the fiscal stimulus package passed earlier that year. 
D)  a sudden increase in military expenditure as a result of the war in Iraq. 
E)  an increase in the national debt earlier that year. 
A)  an increase in the financial aid given to Greece earlier that year. 
B)  an increase in expenditures on Social Security and Medicare. 
C)  the fiscal stimulus package passed earlier that year. 
D)  a sudden increase in military expenditure as a result of the war in Iraq. 
E)  an increase in the national debt earlier that year.

Question 16

When has deficit financing been justified?

Accepted Answer

A)  to decrease taxes 
B)  to increase in defense spending 
C)  to increase in the use of automatic stabilizers 
D)  to increase the economy's productivity 
E)  to increase in transfer payments 
A)  to decrease taxes 
B)  to increase in defense spending 
C)  to increase in the use of automatic stabilizers 
D)  to increase the economy's productivity 
E)  to increase in transfer payments

Question 17

_____ in the United States relative to GDP increased from 34 percent in 2000 to 38 percent in 2017.

Accepted Answer

A)  Interest rates 
B)  Government outlays 
C)  Government revenues 
D)  Unemployment rates 
E)  Budget deficits 
A)  Interest rates 
B)  Government outlays 
C)  Government revenues 
D)  Unemployment rates 
E)  Budget deficits

Question 18

Which of the following statements is true?

Accepted Answer

A)  Federal budget deficits became progressively smaller during the 1990s and turned into a surplus by 1998. 
B)  Federal spending declined relative to GDP, while federal revenues rose relative to GDP during the 1980s. 
C)  Functional finance says that policy makers should be concerned less with the economy's potential output and more with balancing the budget annually. 
D)  A disadvantage of functional finance is that it increases the level of unemployment during recessions. 
E)  A disadvantage of an annually balanced budget is that it dampens swings in the business cycle without increasing the national debt. 
A)  Federal budget deficits became progressively smaller during the 1990s and turned into a surplus by 1998. 
B)  Federal spending declined relative to GDP, while federal revenues rose relative to GDP during the 1980s. 
C)  Functional finance says that policy makers should be concerned less with the economy's potential output and more with balancing the budget annually. 
D)  A disadvantage of functional finance is that it increases the level of unemployment during recessions. 
E)  A disadvantage of an annually balanced budget is that it dampens swings in the business cycle without increasing the national debt.

Question 19

The crowding in of private investment is associated with _____

Accepted Answer

A)  a rightward shift of the aggregate supply curve of an economy. 
B)  a leftward shift of the aggregate supply curve of an economy. 
C)  a reduction in the level of government spending. 
D)  a reduction in corporate income taxes. 
E)  an increase in aggregate demand induced by increased government borrowing. 
A)  a rightward shift of the aggregate supply curve of an economy. 
B)  a leftward shift of the aggregate supply curve of an economy. 
C)  a reduction in the level of government spending. 
D)  a reduction in corporate income taxes. 
E)  an increase in aggregate demand induced by increased government borrowing.

Question 20

Other things remaining constant, higher trade deficits in the United States will lead to _____

Accepted Answer

A)  an increase in U.S. citizens buying foreign securities. 
B)  an increase in domestic savings in the United States. 
C)  a decrease in the demand for U.S. dollars. 
D)  an increase in funds from abroad. 
E)  an increase in the standard of living of the U.S. residents. 
A)  an increase in U.S. citizens buying foreign securities. 
B)  an increase in domestic savings in the United States. 
C)  a decrease in the demand for U.S. dollars. 
D)  an increase in funds from abroad. 
E)  an increase in the standard of living of the U.S. residents.

An annually balanced budget _____

Problems with the federal government budget process include _____

What was the size of the federal budget in 2016?

Because deadlines are frequently missed, budgets typically run from year to year based on _____

The U.S. government's fiscal year extends from _____

If U.S. interest rates are higher than the world interest rates, we would expect the U.S. dollar to appreciate.

If the deficit is increasing because of the effects of automatic stabilizers, _____

What happens to deficits during recessions?

The Economic Report of the President is prepared by _____

According to the budget philosophy of functional finance, _____

The Budget of the United States Government is officially submitted by _____

A(n) _____ is a budget philosophy that was followed prior to the Great Depression and aimed to match annual revenues with outlays, except during wartime.

U.S. Treasury securities are considered the safest in the world because _____

The long-run opportunity cost of government spending that crowds out private investment _____

A spike in "All Other Outlays" of the federal government in 2009 was due to _____

When has deficit financing been justified?

_____ in the United States relative to GDP increased from 34 percent in 2000 to 38 percent in 2017.

Which of the following statements is true?

The crowding in of private investment is associated with _____

Other things remaining constant, higher trade deficits in the United States will lead to _____

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.

An annually balanced budget _____

Problems with the federal government budget process include _____

What was the size of the federal budget in 2016?

Because deadlines are frequently missed, budgets typically run from year to year based on _____

The U.S. government's fiscal year extends from _____

If U.S. interest rates are higher than the world interest rates, we would expect the U.S. dollar to appreciate.

If the deficit is increasing because of the effects of automatic stabilizers, _____

What happens to deficits during recessions?

The Economic Report of the President is prepared by _____

According to the budget philosophy of functional finance, _____

The Budget of the United States Government is officially submitted by _____

A(n) _____ is a budget philosophy that was followed prior to the Great Depression and aimed to match annual revenues with outlays, except during wartime.

U.S. Treasury securities are considered the safest in the world because _____

The long-run opportunity cost of government spending that crowds out private investment _____

A spike in "All Other Outlays" of the federal government in 2009 was due to _____

When has deficit financing been justified?

_____ in the United States relative to GDP increased from 34 percent in 2000 to 38 percent in 2017.

Which of the following statements is true?

The crowding in of private investment is associated with _____

Other things remaining constant, higher trade deficits in the United States will lead to _____

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