Question 1

According to tax receipt and outlay categories,what are the main components of the federal government budget?

Accepted Answer

The budget is divided between the tax receipt side and the outlay side.On the taxation side,the largest components are personal income taxes and social security taxes.Between them they account for over 80 percent of total government tax receipts.The remainder of tax revenue comes from corporate income taxes and indirect taxes,such as taxes on items such as gasoline.On the outlay side,the major three categories are transfer payments,the expenditure on goods and service,and interest payments on the government debt.The first category is the largest and continues to grow,accounting for well over half of all payments.These include payments to individuals,businesses,other levels of government,and governments around the world.These payments come in the form of Social Security benefits,unemployment payments,and subsidies,grants and loans to farmers,local and state governments and foreign governments.The last category,debt interest,is the smallest and even fell during the late 2000s because the interest rate was low.

Question 2

-The figure above shows tax revenues and government expenditures in the economy of Meadowlake.Potential GDP is $15 trillion.If real GDP is $11 trillion,then the government has a ________.

Accepted Answer

A)  cyclical deficit 
B)  structural deficit 
C)  structural surplus 
D)  cyclical surplus 
A)  cyclical deficit 
B)  structural deficit 
C)  structural surplus 
D)  cyclical surplus A

Question 3

The aggregate demand curve is shifted rightward by

Accepted Answer

A)  an increase in tax rates. 
B)  a decrease in government expenditure. 
C)  an increase in the federal budget surplus. 
D)  an increase in government expenditure. 
A)  an increase in tax rates. 
B)  a decrease in government expenditure. 
C)  an increase in the federal budget surplus. 
D)  an increase in government expenditure. D

Question 4

If we compare the United States to France,the U.S.tax wedge is ________ the French tax wedge.

Accepted Answer

A)  larger than 
B)  equals to 
C)  smaller than 
D)  not comparable to 
A)  larger than 
B)  equals to 
C)  smaller than 
D)  not comparable to

Question 5

-Economic data for a mythical economy in the years 2006-2010 are summarized in the figure above.Assume that the spending formulas and tax schedules are identical for all years.When the economy is at full employment,the government has a

Accepted Answer

A)  budget surplus. 
B)  balanced budget. 
C)  budget deficit. 
D)  procyclical policy. 
A)  budget surplus. 
B)  balanced budget. 
C)  budget deficit. 
D)  procyclical policy.

Question 6

In October 2008,President Bush enacted the Alternative Minimum Tax Relief Act of 2008,which resulted in lower taxes on labor income. According the supply-side view,this would result in

Accepted Answer

A)  an increase in the tax wedge. 
B)  a leftward shift in the supply of labor curve. 
C)  a movement along the supply of labor curve. 
D)  a rightward shift in the supply of labor curve. 
A)  an increase in the tax wedge. 
B)  a leftward shift in the supply of labor curve. 
C)  a movement along the supply of labor curve. 
D)  a rightward shift in the supply of labor curve.

Question 7

"Obama Considers Delaying Tax Increase" "U.S.President-elect Barack Obama is considering delaying his proposal to repeal the Bush tax cuts for the wealthiest Americans in light of the economic downturn."
Www)nytimes.com 11/23/2008
Obama's possible decision to delay the tax increase recognizes the fact that a tax increase will ________ disposable income and ________ real GDP.

Accepted Answer

A)  decrease; increase 
B)  decrease; decrease 
C)  increase; increase 
D)  increase; decrease 
A)  decrease; increase 
B)  decrease; decrease 
C)  increase; increase 
D)  increase; decrease

Question 8

The Ricardo-Barro effect implies that a budget deficit will not raise interest rates or reduce investment.

Accepted Answer

A) True 
 B)False

Question 9

$$\begin{array} { | c | c | c | } 
\hline \text { Year } & \begin{array} { c } 
\text { Government } \
\text { tax revenues } \
\text { (billions of } \
\text { dollars) }
\end{array} & \begin{array} { c } 
\text { Government } \
\text { expenditures } \
\text { (billions of } \
\text { dollars) }
\end{array} \
\hline 1 & 240 & 240 \
\hline 2 & 250 & 245 \
\hline 3 & 260 & 255 \
\hline 4 & 300 & 320 \
\hline 5 & 325 & 340 \
\hline
\end{array}$$
-What is the amount of the surplus or deficit incurred in year 4 by the government shown in the above table?

Accepted Answer

A)  $20 billion deficit 
B)  $35 billion surplus 
C)  $5 billion surplus 
D)  $320 billion surplus 
A)  $20 billion deficit 
B)  $35 billion surplus 
C)  $5 billion surplus 
D)  $320 billion surplus

Question 10

The largest source of government revenues is ________.

Accepted Answer

A)  personal income taxes 
B)  indirect taxes 
C)  corporate income taxes 
D)  social security taxes 
A)  personal income taxes 
B)  indirect taxes 
C)  corporate income taxes 
D)  social security taxes

Question 11

The U.S.federal budget over the past 30 years has been

Accepted Answer

A)  in balance most years. 
B)  in deficit most of the years. 
C)  in surplus most of the years. 
D)  in surplus about half the time and deficit the other half. 
A)  in balance most years. 
B)  in deficit most of the years. 
C)  in surplus most of the years. 
D)  in surplus about half the time and deficit the other half.

Question 12

$$\begin{array} { | l | c | } 
\hline \text { Component } & \begin{array} { c } 
\text { Dollars } \
\text { (billion) }
\end{array} \
\hline \text { Personal income taxes } & 500 \
\hline \text { Social security taxes } & 400 \
\hline \text { Corporate income taxes } & 150 \
\hline \text { Indirect taxes } & 75 \
\hline \text { Transfer payments } & 1,200 \
\hline \text { Expenditure on goods and } & \
 \text { services } & 225 \
\hline \text { Debt interest } & 75 \
\hline
\end{array}$$
-The table above has data for a country's government budget.Government outlays for the economy equal ________ billion.

Accepted Answer

A)  $1200 
B)  $1275 
C)  $1500 
D)  $1425 
A)  $1200 
B)  $1275 
C)  $1500 
D)  $1425

Question 13

A country has been in existence for only two years.In the first year,tax revenues were $1.0 million and outlays were $1.5 million.In the second year,tax revenues were $1.5 million and outlays were $2.0 million.At the end of the second year,the total government debt was ________.

Accepted Answer

A)  $0.5 million 
B)  $1 million 
C)  $2.5 million 
D)  $3.5 million 
A)  $0.5 million 
B)  $1 million 
C)  $2.5 million 
D)  $3.5 million

Question 14

A cyclical surplus is a

Accepted Answer

A)  budget surplus only because real GDP is less than potential GDP. 
B)  budget surplus only because real GDP is greater than potential GDP. 
C)  budget surplus only because real GDP is equal to potential GDP. 
D)  nominal, as opposed to real, budget surplus. 
A)  budget surplus only because real GDP is less than potential GDP. 
B)  budget surplus only because real GDP is greater than potential GDP. 
C)  budget surplus only because real GDP is equal to potential GDP. 
D)  nominal, as opposed to real, budget surplus.

Question 15

Because of automatic fiscal policy,when real GDP decreases

Accepted Answer

A)  government expenditures decrease and tax revenues increase. 
B)  government expenditures increase and tax revenues decrease. 
C)  government expenditures equal tax revenues. 
D)  the economy will automatically go to full employment. 
A)  government expenditures decrease and tax revenues increase. 
B)  government expenditures increase and tax revenues decrease. 
C)  government expenditures equal tax revenues. 
D)  the economy will automatically go to full employment.

Question 16

An income tax ________ potential GDP by shifting the ________ curve ________.

Accepted Answer

A)  increases; labor demand; rightward 
B)  decreases; labor demand; leftward 
C)  increases; labor supply; rightward 
D)  decreases; labor supply; leftward 
A)  increases; labor demand; rightward 
B)  decreases; labor demand; leftward 
C)  increases; labor supply; rightward 
D)  decreases; labor supply; leftward

Question 17

-Does the figure above illustrate a recessionary or an inflationary gap?
What do potential GDP and real GDP equal?
What is an appropriate fiscal policy to restore real GDP to potential real GDP?

Accepted Answer

A inflationary gap occurs when real GDP

Question 18

Comparing the fiscal imbalance for the current generation versus future generations,it is the case that

Accepted Answer

A)  future generations pay a larger share of the fiscal imbalance. 
B)  the current generation pays a larger share of the fiscal imbalance. 
C)  each generation pays half of the fiscal imbalance. 
D)  each generation pays all of its fiscal imbalance. 
A)  future generations pay a larger share of the fiscal imbalance. 
B)  the current generation pays a larger share of the fiscal imbalance. 
C)  each generation pays half of the fiscal imbalance. 
D)  each generation pays all of its fiscal imbalance.

Question 19

The Council of Economic Advisors advises the

Accepted Answer

A)  President. 
B)  Congress. 
C)  Senate. 
D)  House of Representatives. 
A)  President. 
B)  Congress. 
C)  Senate. 
D)  House of Representatives.

Question 20

What are some of the limitations of fiscal policy?
Briefly discuss them.

Accepted Answer

One limitation of fiscal policy is the f

According to tax receipt and outlay categories,what are the main components of the federal government budget?

-The figure above shows tax revenues and government expenditures in the economy of Meadowlake.Potential GDP is $15 trillion.If real GDP is $11 trillion,then the government has a ________.

The aggregate demand curve is shifted rightward by

If we compare the United States to France,the U.S.tax wedge is ________ the French tax wedge.

-Economic data for a mythical economy in the years 2006-2010 are summarized in the figure above.Assume that the spending formulas and tax schedules are identical for all years.When the economy is at full employment,the government has a

In October 2008,President Bush enacted the Alternative Minimum Tax Relief Act of 2008,which resulted in lower taxes on labor income. According the supply-side view,this would result in

The Ricardo-Barro effect implies that a budget deficit will not raise interest rates or reduce investment.

Year Government tax revenues (billions of dollars) Government expenditures (billions of dollars) 1 240 240 2 250 245 3 260 255 4 300 320 5 325 340 -What is the amount of the surplus or deficit incurred in year 4 by the government shown in the above table?

The largest source of government revenues is ________.

The U.S.federal budget over the past 30 years has been

A country has been in existence for only two years.In the first year,tax revenues were $1.0 million and outlays were $1.5 million.In the second year,tax revenues were $1.5 million and outlays were $2.0 million.At the end of the second year,the total government debt was ________.

A cyclical surplus is a

Because of automatic fiscal policy,when real GDP decreases

An income tax potential GDP by shifting the curve .

-Does the figure above illustrate a recessionary or an inflationary gap? What do potential GDP and real GDP equal? What is an appropriate fiscal policy to restore real GDP to potential real GDP?

Comparing the fiscal imbalance for the current generation versus future generations,it is the case that

The Council of Economic Advisors advises the

What are some of the limitations of fiscal policy? Briefly discuss them.

What Is Economics

The Economic Problem

Demand and Supply

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, The Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

Inflation, Jobs, and the Business Cycle

Monetary Policy

International Trade Policy

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters

Exam 13: Fiscal Policy

According to tax receipt and outlay categories,what are the main components of the federal government budget?

-The figure above shows tax revenues and government expenditures in the economy of Meadowlake.Potential GDP is $15 trillion.If real GDP is $11 trillion,then the government has a ________.

The aggregate demand curve is shifted rightward by

If we compare the United States to France,the U.S.tax wedge is ________ the French tax wedge.

-Economic data for a mythical economy in the years 2006-2010 are summarized in the figure above.Assume that the spending formulas and tax schedules are identical for all years.When the economy is at full employment,the government has a

In October 2008,President Bush enacted the Alternative Minimum Tax Relief Act of 2008,which resulted in lower taxes on labor income. According the supply-side view,this would result in

The Ricardo-Barro effect implies that a budget deficit will not raise interest rates or reduce investment.

Year Government tax revenues (billions of dollars) Government expenditures (billions of dollars) 1 240 240 2 250 245 3 260 255 4 300 320 5 325 340 -What is the amount of the surplus or deficit incurred in year 4 by the government shown in the above table?

The largest source of government revenues is ________.

The U.S.federal budget over the past 30 years has been

A country has been in existence for only two years.In the first year,tax revenues were $1.0 million and outlays were $1.5 million.In the second year,tax revenues were $1.5 million and outlays were $2.0 million.At the end of the second year,the total government debt was ________.

A cyclical surplus is a

Because of automatic fiscal policy,when real GDP decreases

An income tax ________ potential GDP by shifting the ________ curve ________.

-Does the figure above illustrate a recessionary or an inflationary gap? What do potential GDP and real GDP equal? What is an appropriate fiscal policy to restore real GDP to potential real GDP?

Comparing the fiscal imbalance for the current generation versus future generations,it is the case that

The Council of Economic Advisors advises the

What are some of the limitations of fiscal policy? Briefly discuss them.

What Is Economics

The Economic Problem

Demand and Supply

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, The Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

Inflation, Jobs, and the Business Cycle

Monetary Policy

International Trade Policy

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters

An income tax potential GDP by shifting the curve .