Question 1

The government begins year 1 with $25 billion of debt.Based on the information in the above table,what is the amount of debt following year 4?

Accepted Answer

A)  -$20 billion (The government has net saving rather than debt.) 
B)  $35 billion 
C)  $5 billion 
D)  $320 billion 
A)  -$20 billion (The government has net saving rather than debt.) 
B)  $35 billion 
C)  $5 billion 
D)  $320 billion

Question 2

If taxes exactly equaled government outlays the

Accepted Answer

A)  federal government debt would be zero. 
B)  federal government debt would decrease. 
C)  budget deficit would not change. 
D)  budget deficit would be zero. 
A)  federal government debt would be zero. 
B)  federal government debt would decrease. 
C)  budget deficit would not change. 
D)  budget deficit would be zero.

Question 3

In January 2008,the unemployment rate was only 4.9 percent and real GDP was growing. But President Bush "acknowledged that Americans were 'anxious about the economy.' As a result,it was reported that "...the Bush administration and Congressional leaders,increasingly concerned about a possible recession,are moving closer to agreeing that an economic stimulus package is needed soon." In order for the package to be approved,the leaders in Washington implied that "...they might be able to put aside longstanding partisan differences." www.nytimes.com 1/12/2008
Which of the following lags are government officials trying to avoid?

Accepted Answer

A)  the recognition lag 
B)  the impact lag 
C)  the law-making lag 
D)  all of the above 
A)  the recognition lag 
B)  the impact lag 
C)  the law-making lag 
D)  all of the above

Question 4

In December 2012 the structural deficit was estimated to be $325 billion and the cyclical deficit was estimated to be $700 billion.The total deficit equaled ________ billion.

Accepted Answer

A)  $1,025 
B)  $375 
C)  $700 
D)  None of the above answers are correct. 
A)  $1,025 
B)  $375 
C)  $700 
D)  None of the above answers are correct.

Question 5

A tax cut decreases government saving and can thereby crowd out investment.

Accepted Answer

A) True 
 B)False

Question 6

If the economy has a structural deficit of $25 billion and a cyclical deficit of $75,we can conclude that the current budget deficit is ________ billion.

Accepted Answer

A)  $25 
B)  $50 
C)  $75 
D)  $100 
A)  $25 
B)  $50 
C)  $75 
D)  $100

Question 7

Each president can decide when to submit a budget to Congress.

Accepted Answer

A) True 
 B)False

Question 8

A government that currently has a budget deficit can balance its budget by ________.

Accepted Answer

A)  increasing tax revenues by more than it increases outlays 
B)  increasing both tax revenues and outlays by the same amount 
C)  decreasing tax revenues by more than it decreases outlays 
D)  decreasing tax revenues by more than it increases outlays 
A)  increasing tax revenues by more than it increases outlays 
B)  increasing both tax revenues and outlays by the same amount 
C)  decreasing tax revenues by more than it decreases outlays 
D)  decreasing tax revenues by more than it increases outlays

Question 9

The system that measures the lifetime tax burden and benefits of each generation is called

Accepted Answer

A)  actuarial genealogy. 
B)  generational actuary. 
C)  generational accounting. 
D)  actuarial accounting. 
A)  actuarial genealogy. 
B)  generational actuary. 
C)  generational accounting. 
D)  actuarial accounting.

Question 10

When an economy is above full employment and the government has a budget deficit,that deficit ________.

Accepted Answer

A)  exceeds the structural deficit 
B)  is equal to the structural deficit minus the cyclical deficit 
C)  is equal to the cyclical deficit minus the structural deficit 
D)  is less than the structural deficit 
A)  exceeds the structural deficit 
B)  is equal to the structural deficit minus the cyclical deficit 
C)  is equal to the cyclical deficit minus the structural deficit 
D)  is less than the structural deficit

Question 11

Suppose the government of Japan increases its expenditure on goods and services.In the short run,this increase will

Accepted Answer

A)  shift the AD curve in Japan rightward. 
B)  shift the AD curve in Japan leftward. 
C)  cause the price level in Japan to fall. 
D)  None of the above answers is correct. 
A)  shift the AD curve in Japan rightward. 
B)  shift the AD curve in Japan leftward. 
C)  cause the price level in Japan to fall. 
D)  None of the above answers is correct.

Question 12

Splitting the fiscal imbalance between current and future generations is called

Accepted Answer

A)  genealogical accounting. 
B)  actuarial accounting. 
C)  generational imbalance. 
D)  actuarial balance. 
A)  genealogical accounting. 
B)  actuarial accounting. 
C)  generational imbalance. 
D)  actuarial balance.

Question 13

A reason the government expenditure multiplier is larger than 1 is because

Accepted Answer

A)  investment increases when government expenditure increases. 
B)  government expenditure always increases. 
C)  government expenditure generates changes in consumption expenditure. 
D)  taxes are left unchanged. 
A)  investment increases when government expenditure increases. 
B)  government expenditure always increases. 
C)  government expenditure generates changes in consumption expenditure. 
D)  taxes are left unchanged.

Question 14

Generational accounting shows that the present value of the government's commitments to pay benefits are ________ the present value of its taxes.

Accepted Answer

A)  greater than 
B)  less than 
C)  equal to 
D)  not comparable to 
A)  greater than 
B)  less than 
C)  equal to 
D)  not comparable to

Question 15

In early 2013,economists predicted that the U.S.economy would grow more rapidly than had been predicted.If this prediction comes true,then the cyclical deficit will ________ than had been predicted.

Accepted Answer

A)  shrink more rapidly 
B)  shrink more slowly 
C)  increase more slowly 
D)  None of the above are correct because the growth of the economy does not affect the size of the cyclical deficit. 
A)  shrink more rapidly 
B)  shrink more slowly 
C)  increase more slowly 
D)  None of the above are correct because the growth of the economy does not affect the size of the cyclical deficit.

Question 16

Suppose that the government decreases its expenditures on goods and services.Within the AS-AD model,the result will be ________ in real GDP and ________ in the price level.

Accepted Answer

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

Question 17

Income taxes in the United States are part of automatic fiscal policy because

Accepted Answer

A)  tax revenues increase when income increases, thus offsetting some of the increase in aggregate demand. 
B)  tax revenues decrease when income increases, intensifying the increase in aggregate demand. 
C)  the President can increase tax rates whenever the President deems such a policy appropriate. 
D)  tax rates can be adjusted by the Congress to counteract economic fluctuations. 
A)  tax revenues increase when income increases, thus offsetting some of the increase in aggregate demand. 
B)  tax revenues decrease when income increases, intensifying the increase in aggregate demand. 
C)  the President can increase tax rates whenever the President deems such a policy appropriate. 
D)  tax rates can be adjusted by the Congress to counteract economic fluctuations.

Question 18

-In the above figure,if the economy is initially at point D and government expenditure increases,the economy will move to point

Accepted Answer

A)  move to point C. 
B)  move to point A. 
C)  move to point B. 
D)  stay at point D. 
A)  move to point C. 
B)  move to point A. 
C)  move to point B. 
D)  stay at point D.

Question 19

An increase in government expenditure leads to rightward shift of the AD curve.

Accepted Answer

A) True 
 B)False

Question 20

The aggregate demand curve is shifted rightward by an increase in tax rates.

Accepted Answer

A) True 
 B)False

The government begins year 1 with $25 billion of debt.Based on the information in the above table,what is the amount of debt following year 4?

If taxes exactly equaled government outlays the

In December 2012 the structural deficit was estimated to be $325 billion and the cyclical deficit was estimated to be $700 billion.The total deficit equaled ________ billion.

A tax cut decreases government saving and can thereby crowd out investment.

If the economy has a structural deficit of $25 billion and a cyclical deficit of $75,we can conclude that the current budget deficit is ________ billion.

Each president can decide when to submit a budget to Congress.

A government that currently has a budget deficit can balance its budget by ________.

The system that measures the lifetime tax burden and benefits of each generation is called

When an economy is above full employment and the government has a budget deficit,that deficit ________.

Suppose the government of Japan increases its expenditure on goods and services.In the short run,this increase will

Splitting the fiscal imbalance between current and future generations is called

A reason the government expenditure multiplier is larger than 1 is because

Generational accounting shows that the present value of the government's commitments to pay benefits are ________ the present value of its taxes.

In early 2013,economists predicted that the U.S.economy would grow more rapidly than had been predicted.If this prediction comes true,then the cyclical deficit will ________ than had been predicted.

Suppose that the government decreases its expenditures on goods and services.Within the AS-AD model,the result will be in real GDP and in the price level.

Income taxes in the United States are part of automatic fiscal policy because

-In the above figure,if the economy is initially at point D and government expenditure increases,the economy will move to point

An increase in government expenditure leads to rightward shift of the AD curve.

The aggregate demand curve is shifted rightward by an increase in tax rates.

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

The government begins year 1 with $25 billion of debt.Based on the information in the above table,what is the amount of debt following year 4?

If taxes exactly equaled government outlays the

In December 2012 the structural deficit was estimated to be $325 billion and the cyclical deficit was estimated to be $700 billion.The total deficit equaled ________ billion.

A tax cut decreases government saving and can thereby crowd out investment.

If the economy has a structural deficit of $25 billion and a cyclical deficit of $75,we can conclude that the current budget deficit is ________ billion.

Each president can decide when to submit a budget to Congress.

A government that currently has a budget deficit can balance its budget by ________.

The system that measures the lifetime tax burden and benefits of each generation is called

When an economy is above full employment and the government has a budget deficit,that deficit ________.

Suppose the government of Japan increases its expenditure on goods and services.In the short run,this increase will

Splitting the fiscal imbalance between current and future generations is called

A reason the government expenditure multiplier is larger than 1 is because

Generational accounting shows that the present value of the government's commitments to pay benefits are ________ the present value of its taxes.

In early 2013,economists predicted that the U.S.economy would grow more rapidly than had been predicted.If this prediction comes true,then the cyclical deficit will ________ than had been predicted.

Suppose that the government decreases its expenditures on goods and services.Within the AS-AD model,the result will be ________ in real GDP and ________ in the price level.

Income taxes in the United States are part of automatic fiscal policy because

-In the above figure,if the economy is initially at point D and government expenditure increases,the economy will move to point

An increase in government expenditure leads to rightward shift of the AD curve.

The aggregate demand curve is shifted rightward by an increase in tax rates.

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

Suppose that the government decreases its expenditures on goods and services.Within the AS-AD model,the result will be in real GDP and in the price level.