Question 1

To earn a higher return on the assets in the Social Security trust fund,a suggestion has been made to allow the trust fund to

Accepted Answer

A) buy government bonds. 
B) sell limited partnerships. 
C) sell insurance. 
D) invest in the stock market. 
A) buy government bonds. 
B) sell limited partnerships. 
C) sell insurance. 
D) invest in the stock market.

Question 2

From 1995 to 2001,the debt-GDP ratio in the United States

Accepted Answer

A) steadily fell. 
B) steadily increased. 
C) was about constant. 
D) fell from 1995 to 1998, then rose sharply. 
A) steadily fell. 
B) steadily increased. 
C) was about constant. 
D) fell from 1995 to 1998, then rose sharply.

Question 3

All of the following are government capital except

Accepted Answer

A) roads. 
B) schools. 
C) Treasury securities. 
D) mass-transit systems. 
A) roads. 
B) schools. 
C) Treasury securities. 
D) mass-transit systems.

Question 4

The following data describe government spending and revenue.
   
(a)How much is the budget deficit?
(b)How much is the primary budget deficit?
(c)How much is the full-employment budget deficit?
(d)How much is the current deficit?
(e)How much is the current primary deficit?

Accepted Answer

(a)300
(b)

Question 5

The primary current deficit is

Accepted Answer

A) current expenditures - tax revenues. 
B) current expenditures + transfers + net interest - tax revenues. 
C) current expenditures - net interest - tax revenues. 
D) current expenditures + transfers - tax revenues. 
A) current expenditures - tax revenues. 
B) current expenditures + transfers + net interest - tax revenues. 
C) current expenditures - net interest - tax revenues. 
D) current expenditures + transfers - tax revenues.

Question 6

Consider an economy that has the following monetary data.  
The monetary base and the money supply are expected to grow at a constant rate of 20% per year.Inflation and expected inflation are 20% per year.Suppose that bank reserves and currency pay no interest,all currency is held by the public,and bank deposits pay no interest.What is the nominal value of seignorage over the year?

Accepted Answer

A) $10 
B) $60 
C) $70 
D) $200 
A) $10 
B) $60 
C) $70 
D) $200

Question 7

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 - 2N2
And the marginal product of labor is
MPN = 200 - 2N.
A 20% tax is levied on wages.Output per day would be

Accepted Answer

A) 5625. 
B) 7250. 
C) 9375. 
D) 11,250. 
A) 5625. 
B) 7250. 
C) 9375. 
D) 11,250.

Question 8

The current deficit is

Accepted Answer

A) the deficit minus government investment. 
B) the deficit plus net interest payments. 
C) the deficit minus current expenditures. 
D) the deficit minus depreciation. 
A) the deficit minus government investment. 
B) the deficit plus net interest payments. 
C) the deficit minus current expenditures. 
D) the deficit minus depreciation.

Question 9

The idea that all aspects of economic behavior,such as labor supply,saving,and investment,respond to economic incentives,especially tax rates,is known as

Accepted Answer

A) New Keynesian economics. 
B) new classical economics. 
C) tax-structured classical economics. 
D) supply-side economics. 
A) New Keynesian economics. 
B) new classical economics. 
C) tax-structured classical economics. 
D) supply-side economics.

Question 10

Government consumption expenditures equal

Accepted Answer

A) government outlays minus transfer payments. 
B) government outlays minus net interest payments. 
C) government purchases minus government investment. 
D) the government primary deficit plus net interest payments. 
A) government outlays minus transfer payments. 
B) government outlays minus net interest payments. 
C) government purchases minus government investment. 
D) the government primary deficit plus net interest payments.

Question 11

If the deficit is 0.08 times GDP,the existing debt-GDP ratio is 0.8,and the growth rate of nominal GDP is 0.05,then the change in the debt-GDP ratio is

Accepted Answer

A) +0.08 
B) +0.04. 
C) 0) 
D) -0.08. 
A) +0.08 
B) +0.04. 
C) 0) 
D) -0.08.

Question 12

When the economy strengthens,following the period of quantitative easing,the Federal Reserve plans to keep a lid on money growth by

Accepted Answer

A) increasing reserve requirements. 
B) selling dollars in foreign-exchange markets. 
C) increasing the interest rate paid on reserves. 
D) buying dollars in foreign-exchange markets. 
A) increasing reserve requirements. 
B) selling dollars in foreign-exchange markets. 
C) increasing the interest rate paid on reserves. 
D) buying dollars in foreign-exchange markets.

Question 13

The type of tax receipts that has shown the largest growth since the end of 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 14

The real seignorage collected by the government in an all-currency economy is the product of

Accepted Answer

A) the rate of inflation and the real supply of government bonds. 
B) the rate of inflation and the real money supply. 
C) the debt-GDP ratio and the real money supply. 
D) the debt-GDP ratio and the rate of inflation. 
A) the rate of inflation and the real supply of government bonds. 
B) the rate of inflation and the real money supply. 
C) the debt-GDP ratio and the real money supply. 
D) the debt-GDP ratio and the rate of inflation.

Question 15

A decreased government deficit created by a lump-sum tax increase will increase national saving if

Accepted Answer

A) the value of government bonds outstanding grows slower than the public's wealth. 
B) it causes consumption to fall. 
C) the government runs a primary surplus as a result. 
D) the real interest rate is less than the growth rate of real GNP. 
A) the value of government bonds outstanding grows slower than the public's wealth. 
B) it causes consumption to fall. 
C) the government runs a primary surplus as a result. 
D) the real interest rate is less than the growth rate of real GNP.

Question 16

Increases in the debt-GDP ratio are primarily caused by

Accepted Answer

A) a high growth rate of GDP. 
B) a high government deficit relative to GDP. 
C) increases in government borrowing through bonds. 
D) increases in interest rates. 
A) a high growth rate of GDP. 
B) a high government deficit relative to GDP. 
C) increases in government borrowing through bonds. 
D) increases in interest rates.

Question 17

Deficits are a burden on future generations if they

Accepted Answer

A) cause higher rates of inflation to occur. 
B) are not used for government capital formation. 
C) cause national saving to fall. 
D) are always a primary government deficit. 
A) cause higher rates of inflation to occur. 
B) are not used for government capital formation. 
C) cause national saving to fall. 
D) are always a primary government deficit.

Question 18

State and local governments rely on ________ as their primary source of tax receipts.

Accepted Answer

A) personal taxes 
B) contributions for social insurance 
C) indirect business taxes 
D) corporate taxes 
A) personal taxes 
B) contributions for social insurance 
C) indirect business taxes 
D) corporate taxes

Question 19

Find the largest nominal deficit that the government can run without raising the debt-GDP ratio,under each of the following sets of assumptions:
(a)Suppose that real GDP is 20,000 and remains constant,nominal GDP is initially 30,000,inflation is 4%,and the debt-GDP ratio is 1.2.
(b)Suppose that nominal GDP growth is 5% and outstanding nominal debt is 1500.

Accepted Answer

Use the equation: change in debt/GDP = d

Question 20

Because of automatic stabilizers,in recessions the government budget deficit ________,while in expansions the deficit ________.

Accepted Answer

A) falls; rises 
B) falls; falls 
C) rises; falls 
D) rises; rises 
A) falls; rises 
B) falls; falls 
C) rises; falls 
D) rises; rises

To earn a higher return on the assets in the Social Security trust fund,a suggestion has been made to allow the trust fund to

From 1995 to 2001,the debt-GDP ratio in the United States

All of the following are government capital except

The following data describe government spending and revenue. (a)How much is the budget deficit? (b)How much is the primary budget deficit? (c)How much is the full-employment budget deficit? (d)How much is the current deficit? (e)How much is the current primary deficit?

The primary current deficit is

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 - 2N² And the marginal product of labor is MPN = 200 - 2N. A 20% tax is levied on wages.Output per day would be

The current deficit is

The idea that all aspects of economic behavior,such as labor supply,saving,and investment,respond to economic incentives,especially tax rates,is known as

Government consumption expenditures equal

If the deficit is 0.08 times GDP,the existing debt-GDP ratio is 0.8,and the growth rate of nominal GDP is 0.05,then the change in the debt-GDP ratio is

When the economy strengthens,following the period of quantitative easing,the Federal Reserve plans to keep a lid on money growth by

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

The real seignorage collected by the government in an all-currency economy is the product of

A decreased government deficit created by a lump-sum tax increase will increase national saving if

Increases in the debt-GDP ratio are primarily caused by

Deficits are a burden on future generations if they

State and local governments rely on ________ as their primary source of tax receipts.

Because of automatic stabilizers,in recessions the government budget deficit ,while in expansions the deficit .

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

To earn a higher return on the assets in the Social Security trust fund,a suggestion has been made to allow the trust fund to

From 1995 to 2001,the debt-GDP ratio in the United States

All of the following are government capital except

The following data describe government spending and revenue. (a)How much is the budget deficit? (b)How much is the primary budget deficit? (c)How much is the full-employment budget deficit? (d)How much is the current deficit? (e)How much is the current primary deficit?

The primary current deficit is

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 - 2N2 And the marginal product of labor is MPN = 200 - 2N. A 20% tax is levied on wages.Output per day would be

The current deficit is

The idea that all aspects of economic behavior,such as labor supply,saving,and investment,respond to economic incentives,especially tax rates,is known as

Government consumption expenditures equal

If the deficit is 0.08 times GDP,the existing debt-GDP ratio is 0.8,and the growth rate of nominal GDP is 0.05,then the change in the debt-GDP ratio is

When the economy strengthens,following the period of quantitative easing,the Federal Reserve plans to keep a lid on money growth by

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

The real seignorage collected by the government in an all-currency economy is the product of

A decreased government deficit created by a lump-sum tax increase will increase national saving if

Increases in the debt-GDP ratio are primarily caused by

Deficits are a burden on future generations if they

State and local governments rely on ________ as their primary source of tax receipts.

Because of automatic stabilizers,in recessions the government budget deficit ________,while in expansions the deficit ________.

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

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 - 2N² And the marginal product of labor is MPN = 200 - 2N. A 20% tax is levied on wages.Output per day would be

Because of automatic stabilizers,in recessions the government budget deficit ,while in expansions the deficit .