Question 1

-Using the above figure,if full employment occurs at $13 trillion,but the economy is actually producing $15 trillion,then there is a

Accepted Answer

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

Question 2

Taking account of the supply-side effects,a tax cut on labor income ________ employment and ________ potential GDP.

Accepted Answer

A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases 
A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases

Question 3

Which of the following policies shifts the AD curve the farthest leftward?

Accepted Answer

A)  a rise in taxes of $10 billion 
B)  a cut in taxes of $10 billion 
C)  a decrease in government expenditure of $10 billion 
D)  a decrease in both government expenditure and taxes of $10 billion 
A)  a rise in taxes of $10 billion 
B)  a cut in taxes of $10 billion 
C)  a decrease in government expenditure of $10 billion 
D)  a decrease in both government expenditure and taxes of $10 billion

Question 4

Once supply side effects are taken into account,tax cuts for labor income can change I. the supply of labor
II) potential GDP.

Accepted Answer

A)  I only 
B)  I and II 
C)  II only 
D)  Neither I nor II. 
A)  I only 
B)  I and II 
C)  II only 
D)  Neither I nor II.

Question 5

The U.S.government's budget

Accepted Answer

A)  must be balanced each year. 
B)  has mostly been in surplus during the past 30 years. 
C)  has mostly been in deficit during the past 30 years. 
D)  has always been in deficit during the past 30 years. 
A)  must be balanced each year. 
B)  has mostly been in surplus during the past 30 years. 
C)  has mostly been in deficit during the past 30 years. 
D)  has always been in deficit during the past 30 years.

Question 6

The aggregate demand curve is shifted rightward by an increase in government expenditure.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A)  $0 
B)  $5 billion surplus 
C)  $5 billion deficit 
D)  $260 billion surplus 
A)  $0 
B)  $5 billion surplus 
C)  $5 billion deficit 
D)  $260 billion surplus

Question 8

The gross public debt was approximately $6 trillion in 2002 and approximately $16 trillion in 2012.These numbers definitely indicate that in the 10 years between 2002 and 2012,

Accepted Answer

A)  the government had budget deficits that totaled about $10 trillion. 
B)  the government had budget deficits of about $10 trillion per year. 
C)  government outlays increased by about $1 trillion per year. 
D)  government receipts decreased by about $1 trillion per year. 
A)  the government had budget deficits that totaled about $10 trillion. 
B)  the government had budget deficits of about $10 trillion per year. 
C)  government outlays increased by about $1 trillion per year. 
D)  government receipts decreased by about $1 trillion per year.

Question 9

Rank the following federal government outlays from the largest to the smallest. I. debt interest
II) transfer payments
III) expenditure on goods and services

Accepted Answer

A)  I, II, III 
B)  III, II, I 
C)  III, I, II 
D)  II, III, I 
A)  I, II, III 
B)  III, II, I 
C)  III, I, II 
D)  II, III, I

Question 10

Spending on programs that result in transfer payments that depend on the economic state of individuals and businesses is called ________.

Accepted Answer

A)  transfer spending 
B)  welfare 
C)  needs-tested spending 
D)  business subsidies 
A)  transfer spending 
B)  welfare 
C)  needs-tested spending 
D)  business subsidies

Question 11

Between 2000 and 2005,Finland increased its tax on interest income. As a result,the tax wedge ________ and the growth rate of real GDP ________.

Accepted Answer

A)  decreased; slowed 
B)  increased; slowed 
C)  decreased; increased 
D)  increased; increased 
A)  decreased; slowed 
B)  increased; slowed 
C)  decreased; increased 
D)  increased; increased

Question 12

For the years 2011 and 2012,the Social Security payroll tax was reduced by 2 percentage points.This reduction ________ the fiscal imbalance.

Accepted Answer

A)  increased 
B)  did not change 
C)  decreased 
D)  None of the above answers are correct because the impact on the fiscal imbalance depends on factors other than the Social Security tax. 
A)  increased 
B)  did not change 
C)  decreased 
D)  None of the above answers are correct because the impact on the fiscal imbalance depends on factors other than the Social Security tax.

Question 13

What does the Employment Act of 1946 specify?
Why is it an important economic milestone?

Accepted Answer

The Employment Act of 1946 said that the

Question 14

If the government raises taxes on labor income and interest income,explain how potential GDP and economic growth are affected.

Accepted Answer

Tax increases on labor income decrease t

Question 15

Federal government outlays as a percentage of GDP are approximately

Accepted Answer

A)  10 percent. 
B)  25 percent. 
C)  50 percent. 
D)  66 percent. 
A)  10 percent. 
B)  25 percent. 
C)  50 percent. 
D)  66 percent.

Question 16

The largest item of government outlays is ________.

Accepted Answer

A)  debt interest 
B)  transfer payments 
C)  expenditures on goods and services 
D)  debt reduction 
A)  debt interest 
B)  transfer payments 
C)  expenditures on goods and services 
D)  debt reduction

Question 17

If the government's outlays are $1.5 trillion and its tax revenues are $2.2 trillion,the government is running a budget

Accepted Answer

A)  surplus of $0.7 trillion. 
B)  surplus of $3.7 trillion. 
C)  deficit of $0.7 trillion. 
D)  deficit of $3.7 trillion. 
A)  surplus of $0.7 trillion. 
B)  surplus of $3.7 trillion. 
C)  deficit of $0.7 trillion. 
D)  deficit of $3.7 trillion.

Question 18

The difference between the before-tax and after-tax rates is referred to as the

Accepted Answer

A)  tax plug. 
B)  deadweight gain. 
C)  tax wedge. 
D)  taxation penalty. 
A)  tax plug. 
B)  deadweight gain. 
C)  tax wedge. 
D)  taxation penalty.

Question 19

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 2?

Accepted Answer

A)  $245 billion 
B)  $5 billion 
C)  $250 billion 
D)  $20 billion 
A)  $245 billion 
B)  $5 billion 
C)  $250 billion 
D)  $20 billion

Question 20

Which of the following relationships is correct?

Accepted Answer

A)  actual budget deficit = structural deficit - cyclical deficit 
B)  cyclical surplus = actual budget deficit - cyclical deficit 
C)  actual budget deficit = structural deficit + cyclical deficit 
D)  cyclical deficit = actual budget deficit + structural deficit 
A)  actual budget deficit = structural deficit - cyclical deficit 
B)  cyclical surplus = actual budget deficit - cyclical deficit 
C)  actual budget deficit = structural deficit + cyclical deficit 
D)  cyclical deficit = actual budget deficit + structural deficit

-Using the above figure,if full employment occurs at $13 trillion,but the economy is actually producing $15 trillion,then there is a

Taking account of the supply-side effects,a tax cut on labor income employment and potential GDP.

Which of the following policies shifts the AD curve the farthest leftward?

Once supply side effects are taken into account,tax cuts for labor income can change I. the supply of labor II) potential GDP.

The U.S.government's budget

The aggregate demand curve is shifted rightward by an increase in government expenditure.

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 3 by the government shown in the above table?

The gross public debt was approximately $6 trillion in 2002 and approximately $16 trillion in 2012.These numbers definitely indicate that in the 10 years between 2002 and 2012,

Rank the following federal government outlays from the largest to the smallest. I. debt interest II) transfer payments III) expenditure on goods and services

Spending on programs that result in transfer payments that depend on the economic state of individuals and businesses is called ________.

Between 2000 and 2005,Finland increased its tax on interest income. As a result,the tax wedge and the growth rate of real GDP .

For the years 2011 and 2012,the Social Security payroll tax was reduced by 2 percentage points.This reduction ________ the fiscal imbalance.

What does the Employment Act of 1946 specify? Why is it an important economic milestone?

If the government raises taxes on labor income and interest income,explain how potential GDP and economic growth are affected.

Federal government outlays as a percentage of GDP are approximately

The largest item of government outlays is ________.

If the government's outlays are $1.5 trillion and its tax revenues are $2.2 trillion,the government is running a budget

The difference between the before-tax and after-tax rates is referred to as the

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 2?

Which of the following relationships is correct?

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

-Using the above figure,if full employment occurs at $13 trillion,but the economy is actually producing $15 trillion,then there is a

Taking account of the supply-side effects,a tax cut on labor income ________ employment and ________ potential GDP.

Which of the following policies shifts the AD curve the farthest leftward?

Once supply side effects are taken into account,tax cuts for labor income can change I. the supply of labor II) potential GDP.

The U.S.government's budget

The aggregate demand curve is shifted rightward by an increase in government expenditure.

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 3 by the government shown in the above table?

The gross public debt was approximately $6 trillion in 2002 and approximately $16 trillion in 2012.These numbers definitely indicate that in the 10 years between 2002 and 2012,

Rank the following federal government outlays from the largest to the smallest. I. debt interest II) transfer payments III) expenditure on goods and services

Spending on programs that result in transfer payments that depend on the economic state of individuals and businesses is called ________.

Between 2000 and 2005,Finland increased its tax on interest income. As a result,the tax wedge ________ and the growth rate of real GDP ________.

For the years 2011 and 2012,the Social Security payroll tax was reduced by 2 percentage points.This reduction ________ the fiscal imbalance.

What does the Employment Act of 1946 specify? Why is it an important economic milestone?

If the government raises taxes on labor income and interest income,explain how potential GDP and economic growth are affected.

Federal government outlays as a percentage of GDP are approximately

The largest item of government outlays is ________.

If the government's outlays are $1.5 trillion and its tax revenues are $2.2 trillion,the government is running a budget

The difference between the before-tax and after-tax rates is referred to as the

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 2?

Which of the following relationships is correct?

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

Taking account of the supply-side effects,a tax cut on labor income employment and potential GDP.

Between 2000 and 2005,Finland increased its tax on interest income. As a result,the tax wedge and the growth rate of real GDP .