Question 1

Which of the following would not act as an automatic stabilizer?

Accepted Answer

A) Unemployment insurance 
B) Government purchases 
C) Personal income taxes 
D) Corporate income taxes 
A) Unemployment insurance 
B) Government purchases 
C) Personal income taxes 
D) Corporate income taxes

Question 2

According to the Ricardian equivalence proposition,a government budget deficit created by a temporary tax cut

Accepted Answer

A) does not affect desired national saving. 
B) does not affect expected future taxes. 
C) reduces desired investment spending. 
D) increases the real interest rate. 
A) does not affect desired national saving. 
B) does not affect expected future taxes. 
C) reduces desired investment spending. 
D) increases the real interest rate.

Question 3

Since 1960,the only period of several years when the full-employment government budget deficit was negative (that is,there was a full-employment surplus)was

Accepted Answer

A) from 2000 to 2005. 
B) the late 1990s and early 2000s. 
C) the mid-1980s. 
D) the early 1970s. 
A) from 2000 to 2005. 
B) the late 1990s and early 2000s. 
C) the mid-1980s. 
D) the early 1970s.

Question 4

The relationship between the government deficit and the change in the monetary base is

Accepted Answer

A) deficit equals change in government debt held by the public minus change in monetary base. 
B) deficit equals change in government debt held by the public plus change in monetary base. 
C) deficit equals change in government debt outstanding plus change in monetary base. 
D) deficit equals change in government debt outstanding minus change in monetary base. 
A) deficit equals change in government debt held by the public minus change in monetary base. 
B) deficit equals change in government debt held by the public plus change in monetary base. 
C) deficit equals change in government debt outstanding plus change in monetary base. 
D) deficit equals change in government debt outstanding minus change in monetary base.

Question 5

The deficit is

Accepted Answer

A) the amount by which government purchases, transfers, and net interest exceed tax revenues. 
B) the amount by which government purchases and transfers exceed tax revenues. 
C) the primary deficit minus net interest payments. 
D) total tax revenues minus net interest minus government expenditures. 
A) the amount by which government purchases, transfers, and net interest exceed tax revenues. 
B) the amount by which government purchases and transfers exceed tax revenues. 
C) the primary deficit minus net interest payments. 
D) total tax revenues minus net interest minus government expenditures.

Question 6

Compared with other countries in the OECD,French government spending relative to GDP is

Accepted Answer

A) among the highest. 
B) about average. 
C) slightly below average. 
D) among the lowest. 
A) among the highest. 
B) about average. 
C) slightly below average. 
D) among the lowest.

Question 7

Real money demand in the economy is given by
L = 0.3Y - 600i,
where Y is real income and i is the nominal interest rate.In equilibrium,real money demand L equals real money supply M/P.Suppose that Y equals 2000 and the real interest rate is 5%.
(a)At what rate of inflation is seignorage maximized?
(b)What is the maximum amount of seignorage revenue?

Accepted Answer

The answer of Real money demand in the economy is...

Question 8

How is real seignorage revenue related to inflation? How does the quantity of real seignorage revenue change as inflation rises from zero to a positive level,to still higher levels?

Accepted Answer

Real seignorage revenue is the inflation

Question 9

Provisions in the budget that cause government spending to rise or taxes to fall without legislation when GDP falls are known as

Accepted Answer

A) primary deficit enhancers. 
B) expansionary fiscal stimulus. 
C) non-political fiscal policy. 
D) automatic stabilizers. 
A) primary deficit enhancers. 
B) expansionary fiscal stimulus. 
C) non-political fiscal policy. 
D) automatic stabilizers.

Question 10

The stimulus package of 2009 had the effect of

Accepted Answer

A) causing higher rates of inflation to occur. 
B) giving new foreign aid to help less developed countries. 
C) significantly raising the debt to GDP ratio. 
D) reducing the primary government deficit. 
A) causing higher rates of inflation to occur. 
B) giving new foreign aid to help less developed countries. 
C) significantly raising the debt to GDP ratio. 
D) reducing the primary government deficit.

Question 11

The type of tax receipts that has shown the slowest growth since World War II has been

Accepted Answer

A) personal taxes. 
B) contributions for social insurance. 
C) taxes on production and imports. 
D) corporate taxes. 
A) personal taxes. 
B) contributions for social insurance. 
C) taxes on production and imports. 
D) corporate taxes.

Question 12

The total amount of taxes paid divided by before-tax income is the

Accepted Answer

A) median taxpayer rate. 
B) rate of hysteresis. 
C) average tax rate. 
D) marginal tax rate. 
A) median taxpayer rate. 
B) rate of hysteresis. 
C) average tax rate. 
D) marginal tax rate.

Question 13

Suppose that all workers place a value on their leisure of 40 goods per day.The production function relating output per day Y to the number of people working per day N is Y = 200N - N2
And the marginal product of labor is
MPN = 200 - 2N.
A 20% tax is levied on wages.In terms of lost output,what is the cost of the distortion introduced by this tax?

Accepted Answer

A) 25 
B) 75 
C) 150 
D) 225 
A) 25 
B) 75 
C) 150 
D) 225

Question 14

The amount by which government purchases and transfers exceed tax revenues is known as the

Accepted Answer

A) primary surplus. 
B) primary deficit. 
C) primary current deficit. 
D) government debt. 
A) primary surplus. 
B) primary deficit. 
C) primary current deficit. 
D) government debt.

Question 15

Seignorage is the revenue a government raises by

Accepted Answer

A) taxation. 
B) printing money. 
C) borrowing money. 
D) charging fees for services. 
A) taxation. 
B) printing money. 
C) borrowing money. 
D) charging fees for services.

Question 16

The current deficit minus net interest is called the
A)primary deficit.
B)net current deficit.
C)current surplus.
D)primary current deficit.

Accepted Answer

The answer of The current deficit minus net interest is...

Question 17

The average cost of the distortion created by taxes

Accepted Answer

A) increases proportionately with the tax rate. 
B) is lower when the tax rate is constant than when it fluctuates. 
C) is higher when the tax rate is constant than when it fluctuates. 
D) equals the square root of the tax rate. 
A) increases proportionately with the tax rate. 
B) is lower when the tax rate is constant than when it fluctuates. 
C) is higher when the tax rate is constant than when it fluctuates. 
D) equals the square root of the tax rate.

Question 18

According to the Ricardian equivalence proposition,current deficits

Accepted Answer

A) will not affect consumption or national saving. 
B) will affect consumption but not national saving. 
C) will affect national saving but not consumption. 
D) will affect both consumption and national saving. 
A) will not affect consumption or national saving. 
B) will affect consumption but not national saving. 
C) will affect national saving but not consumption. 
D) will affect both consumption and national saving.

Question 19

The largest source of tax receipts for the government is

Accepted Answer

A) personal taxes. 
B) contributions for social insurance. 
C) taxes on production and imports. 
D) corporate taxes. 
A) personal taxes. 
B) contributions for social insurance. 
C) taxes on production and imports. 
D) corporate taxes.

Question 20

The revenue that a government raises by printing money is called

Accepted Answer

A) seignorage. 
B) monetary revenue. 
C) currency credit. 
D) currency inflation. 
A) seignorage. 
B) monetary revenue. 
C) currency credit. 
D) currency inflation.

Which of the following would not act as an automatic stabilizer?

According to the Ricardian equivalence proposition,a government budget deficit created by a temporary tax cut

Since 1960,the only period of several years when the full-employment government budget deficit was negative (that is,there was a full-employment surplus)was

The relationship between the government deficit and the change in the monetary base is

The deficit is

Compared with other countries in the OECD,French government spending relative to GDP is

How is real seignorage revenue related to inflation? How does the quantity of real seignorage revenue change as inflation rises from zero to a positive level,to still higher levels?

Provisions in the budget that cause government spending to rise or taxes to fall without legislation when GDP falls are known as

The stimulus package of 2009 had the effect of

The type of tax receipts that has shown the slowest growth since World War II has been

The total amount of taxes paid divided by before-tax income is the

The amount by which government purchases and transfers exceed tax revenues is known as the

Seignorage is the revenue a government raises by

The current deficit minus net interest is called the A)primary deficit. B)net current deficit. C)current surplus. D)primary current deficit.

The average cost of the distortion created by taxes

According to the Ricardian equivalence proposition,current deficits

The largest source of tax receipts for the government is

The revenue that a government raises by printing money is called

Introduction to Macroeconomics

The Measurement and Structure of the National Economy

Productivity, output, and Employment

Consumption, saving, and Investment

Saving and Investment in the Open Economy

Long-Run Economic Growth

The Asset Market, money, and Prices

Business Cycles

The Is-Lmad-As Model

Classical Business Cycle Analysis

Keynesianism: the Macroeconomics of Wage and Price Rigidity

Unemployment and Inflation

Exchange Rates, business Cycles, and Macroeconomic Policy in the Open Economy

Monetary Policy and the Federal Reserve System

Filters

Exam 15: Government Spending and Its Financing

Which of the following would not act as an automatic stabilizer?

According to the Ricardian equivalence proposition,a government budget deficit created by a temporary tax cut

Since 1960,the only period of several years when the full-employment government budget deficit was negative (that is,there was a full-employment surplus)was

The relationship between the government deficit and the change in the monetary base is

The deficit is

Compared with other countries in the OECD,French government spending relative to GDP is

How is real seignorage revenue related to inflation? How does the quantity of real seignorage revenue change as inflation rises from zero to a positive level,to still higher levels?

Provisions in the budget that cause government spending to rise or taxes to fall without legislation when GDP falls are known as

The stimulus package of 2009 had the effect of

The type of tax receipts that has shown the slowest growth since World War II has been

The total amount of taxes paid divided by before-tax income is the

The amount by which government purchases and transfers exceed tax revenues is known as the

Seignorage is the revenue a government raises by

The current deficit minus net interest is called the A)primary deficit. B)net current deficit. C)current surplus. D)primary current deficit.

The average cost of the distortion created by taxes

According to the Ricardian equivalence proposition,current deficits

The largest source of tax receipts for the government is

The revenue that a government raises by printing money is called

Introduction to Macroeconomics

The Measurement and Structure of the National Economy

Productivity, output, and Employment

Consumption, saving, and Investment

Saving and Investment in the Open Economy

Long-Run Economic Growth

The Asset Market, money, and Prices

Business Cycles

The Is-Lmad-As Model

Classical Business Cycle Analysis

Keynesianism: the Macroeconomics of Wage and Price Rigidity

Unemployment and Inflation

Exchange Rates, business Cycles, and Macroeconomic Policy in the Open Economy

Monetary Policy and the Federal Reserve System

Filters