Question 1

Expansionary fiscal policy involves

Accepted Answer

A)  increasing government purchases or decreasing taxes. 
B)  increasing taxes or decreasing government purchases. 
C)  increasing the money supply and decreasing interest rates. 
D)  decreasing the money supply and increasing interest rates. 
A)  increasing government purchases or decreasing taxes. 
B)  increasing taxes or decreasing government purchases. 
C)  increasing the money supply and decreasing interest rates. 
D)  decreasing the money supply and increasing interest rates.

Question 2

Federal government expenditures,as a percentage of GDP,

Accepted Answer

A)  have risen since the early 1950s to the present. 
B)  have fallen since the early 1950s to the present. 
C)  rose from 1950 to 1991, fell from 1992 to 2001, and have risen from 2001 to the present. 
D)  rose from 1950 to 2001 and then fell from 2001 to the present. 
E)  rose from 1950 to 1980, fell from 1981 to 2001, and have risen from 2001 to the present. 
A)  have risen since the early 1950s to the present. 
B)  have fallen since the early 1950s to the present. 
C)  rose from 1950 to 1991, fell from 1992 to 2001, and have risen from 2001 to the present. 
D)  rose from 1950 to 2001 and then fell from 2001 to the present. 
E)  rose from 1950 to 1980, fell from 1981 to 2001, and have risen from 2001 to the present.

Question 3

The majority of the federal government debt is held by government agencies.

Accepted Answer

A) True 
 B)False

Question 4

The larger the marginal propensity to import,the larger the government purchases multiplier.

Accepted Answer

A) True 
 B)False

Question 5

What is the "tax wedge"?

Accepted Answer

The "tax wedge" is t

Question 6

The Social Security and Medicare programs have been a failure in terms of reducing poverty among elderly U.S.citizens.

Accepted Answer

A) True 
 B)False

Question 7

Expansionary fiscal policy involves increasing government purchases or increasing taxes.

Accepted Answer

A) True 
 B)False

Question 8

Figure 27-2
  
-Refer to Figure 27-2.In the dynamic model of AD-AS in the figure above,if the economy is at point A in year 1 and is expected to go to point B in year 2,Congress and the president would most likely

Accepted Answer

A)  decrease government spending. 
B)  increase government spending. 
C)  increase oil prices. 
D)  increase taxes. 
E)  lower interest rates. 
A)  decrease government spending. 
B)  increase government spending. 
C)  increase oil prices. 
D)  increase taxes. 
E)  lower interest rates.

Question 9

Which of the following would not be considered an automatic stabilizer?

Accepted Answer

A)  legislation increasing funding for job retraining passed during a recession 
B)  decreasing unemployment insurance payments due to decreased jobless during an expansion 
C)  rising income tax collections due to rising incomes during an expansion 
D)  declining food stamp payments due to more persons finding jobs during an expansion 
A)  legislation increasing funding for job retraining passed during a recession 
B)  decreasing unemployment insurance payments due to decreased jobless during an expansion 
C)  rising income tax collections due to rising incomes during an expansion 
D)  declining food stamp payments due to more persons finding jobs during an expansion

Question 10

A decrease in the tax rate will ________ the disposable income of households and ________ the size of the multiplier effect.

Accepted Answer

A)  increase; increase 
B)  decrease; increase 
C)  increase; decrease 
D)  decrease; decrease 
E)  increase; not change 
A)  increase; increase 
B)  decrease; increase 
C)  increase; decrease 
D)  decrease; decrease 
E)  increase; not change

Question 11

Which of the following is considered contractionary fiscal policy?

Accepted Answer

A)  Congress increases the income tax rate. 
B)  Congress increases defense spending. 
C)  Legislation removes a college tuition deduction from federal income taxes. 
D)  The New Jersey legislature cuts highway spending to balance its budget. 
A)  Congress increases the income tax rate. 
B)  Congress increases defense spending. 
C)  Legislation removes a college tuition deduction from federal income taxes. 
D)  The New Jersey legislature cuts highway spending to balance its budget.

Question 12

Which of the following would be most likely to induce Congress and the president to conduct contractionary fiscal policy? A significant

Accepted Answer

A)  decrease in oil prices. 
B)  decrease in real GDP. 
C)  increase in inflation. 
D)  increase in labor productivity. 
A)  decrease in oil prices. 
B)  decrease in real GDP. 
C)  increase in inflation. 
D)  increase in labor productivity.

Question 13

Does expansionary fiscal policy directly increase the money supply? Isn't it true that the president and Congress fight recessions by spending more money?

Accepted Answer

No,expansionary fiscal policy does not d

Question 14

The three categories of federal government expenditures,in addition to government purchases,are

Accepted Answer

A)  interest on the national debt, grants to state and local governments, and transfer payments. 
B)  interest on the national debt, defense spending, and transfer payments. 
C)  defense spending, budgets of federal agencies, and transfer payments. 
D)  defense spending, Social Security, and Medicare. 
A)  interest on the national debt, grants to state and local governments, and transfer payments. 
B)  interest on the national debt, defense spending, and transfer payments. 
C)  defense spending, budgets of federal agencies, and transfer payments. 
D)  defense spending, Social Security, and Medicare.

Question 15

Tax cuts on business income ________ aggregate demand.

Accepted Answer

A)  would decrease 
B)  would increase 
C)  would not change 
D)  may increase or decrease 
A)  would decrease 
B)  would increase 
C)  would not change 
D)  may increase or decrease

Question 16

The largest and fastest-growing category of federal government expenditures is

Accepted Answer

A)  grants to state and local governments. 
B)  interest on the national debt. 
C)  national park spending. 
D)  transfer payments. 
A)  grants to state and local governments. 
B)  interest on the national debt. 
C)  national park spending. 
D)  transfer payments.

Question 17

The budget deficit increases during wars and recessions.

Accepted Answer

A) True 
 B)False

Question 18

List the five categories of federal government expenditures.

Accepted Answer

1.Defense spending
2.Transfer

Question 19

Which of the following would be most likely to induce Congress and the president to conduct expansionary fiscal policy? A significant

Accepted Answer

A)  decrease in investment spending. 
B)  decrease in oil prices. 
C)  increase in consumption spending. 
D)  increase in net exports. 
A)  decrease in investment spending. 
B)  decrease in oil prices. 
C)  increase in consumption spending. 
D)  increase in net exports.

Question 20

Calculate the government purchases multiplier if the marginal propensity to consume equals 0.75,the tax rate is 0.2,and the marginal propensity to import equals 0.3.

Accepted Answer

A)  1.43 
B)  1.6 
C)  3.33 
D)  4 
A)  1.43 
B)  1.6 
C)  3.33 
D)  4

Expansionary fiscal policy involves

Federal government expenditures,as a percentage of GDP,

The majority of the federal government debt is held by government agencies.

The larger the marginal propensity to import,the larger the government purchases multiplier.

What is the "tax wedge"?

The Social Security and Medicare programs have been a failure in terms of reducing poverty among elderly U.S.citizens.

Expansionary fiscal policy involves increasing government purchases or increasing taxes.

Figure 27-2 -Refer to Figure 27-2.In the dynamic model of AD-AS in the figure above,if the economy is at point A in year 1 and is expected to go to point B in year 2,Congress and the president would most likely

Which of the following would not be considered an automatic stabilizer?

A decrease in the tax rate will the disposable income of households and the size of the multiplier effect.

Which of the following is considered contractionary fiscal policy?

Which of the following would be most likely to induce Congress and the president to conduct contractionary fiscal policy? A significant

Does expansionary fiscal policy directly increase the money supply? Isn't it true that the president and Congress fight recessions by spending more money?

The three categories of federal government expenditures,in addition to government purchases,are

Tax cuts on business income ________ aggregate demand.

The largest and fastest-growing category of federal government expenditures is

The budget deficit increases during wars and recessions.

List the five categories of federal government expenditures.

Which of the following would be most likely to induce Congress and the president to conduct expansionary fiscal policy? A significant

Calculate the government purchases multiplier if the marginal propensity to consume equals 0.75,the tax rate is 0.2,and the marginal propensity to import equals 0.3.

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency,government Price Setting,and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Exam 16: Fiscal Policy

Expansionary fiscal policy involves

Federal government expenditures,as a percentage of GDP,

The majority of the federal government debt is held by government agencies.

The larger the marginal propensity to import,the larger the government purchases multiplier.

What is the "tax wedge"?

The Social Security and Medicare programs have been a failure in terms of reducing poverty among elderly U.S.citizens.

Expansionary fiscal policy involves increasing government purchases or increasing taxes.

Figure 27-2 -Refer to Figure 27-2.In the dynamic model of AD-AS in the figure above,if the economy is at point A in year 1 and is expected to go to point B in year 2,Congress and the president would most likely

Which of the following would not be considered an automatic stabilizer?

A decrease in the tax rate will ________ the disposable income of households and ________ the size of the multiplier effect.

Which of the following is considered contractionary fiscal policy?

Which of the following would be most likely to induce Congress and the president to conduct contractionary fiscal policy? A significant

Does expansionary fiscal policy directly increase the money supply? Isn't it true that the president and Congress fight recessions by spending more money?

The three categories of federal government expenditures,in addition to government purchases,are

Tax cuts on business income ________ aggregate demand.

The largest and fastest-growing category of federal government expenditures is

The budget deficit increases during wars and recessions.

List the five categories of federal government expenditures.

Which of the following would be most likely to induce Congress and the president to conduct expansionary fiscal policy? A significant

Calculate the government purchases multiplier if the marginal propensity to consume equals 0.75,the tax rate is 0.2,and the marginal propensity to import equals 0.3.

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency,government Price Setting,and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

A decrease in the tax rate will the disposable income of households and the size of the multiplier effect.