Question 1

The present value of the government's commitments to pay benefits minus the present value of its tax revenues is called

Accepted Answer

A)  calculated fiscal obligations. 
B)  fiscal imbalance. 
C)  fiscal balance. 
D)  fiscal obligations. 
A)  calculated fiscal obligations. 
B)  fiscal imbalance. 
C)  fiscal balance. 
D)  fiscal obligations.

Question 2

Automatic fiscal policy occurs

Accepted Answer

A)  because monetary policy is effective. 
B)  because tax revenues and transfer payments fluctuate with real GDP. 
C)  because government expenditures on goods and services fluctuate with real GDP. 
D)  when the Congress makes changes to transfer payment programs. 
A)  because monetary policy is effective. 
B)  because tax revenues and transfer payments fluctuate with real GDP. 
C)  because government expenditures on goods and services fluctuate with real GDP. 
D)  when the Congress makes changes to transfer payment programs.

Question 3

What is automatic fiscal policy?
How does it affect the budget deficit and/or budget surplus during a recession and during an expansion?

Accepted Answer

Automatic fiscal policy are features of

Question 4

All developed countries have about the same ratio of government deficit to GDP.

Accepted Answer

A) True 
 B)False

Question 5

Generational accounting does NOT investigate issues involving

Accepted Answer

A)  the budget deficit 
B)  government obligations such as Social Security 
C)  the ownership of corporate stock 
D)  the burden of taxes 
A)  the budget deficit 
B)  government obligations such as Social Security 
C)  the ownership of corporate stock 
D)  the burden of taxes

Question 6

If tax receipts exactly equaled government outlays in a year,the budget deficit would be zero.

Accepted Answer

A) True 
 B)False

Question 7

In response to the 2008 recession,New Zealand's Finance Minister Bill English stated that "...the 7 billion New Zealand dollars would be allocated to new infrastructure spending,providing financial aid to workers hit by layoffs as the economy slows and includes tax cuts planned for April." www.iht.com,11/26/2008
New Zealand's government expects the policies to shift the ________ but at this point in time the ________ might weaken its ability to affect real GDP.

Accepted Answer

A)  AD curve rightward; recognition lag 
B)  LAS curve leftward; impact lag. 
C)  SAS curve rightward; law-making lag 
D)  AD curve rightward; impact lag 
A)  AD curve rightward; recognition lag 
B)  LAS curve leftward; impact lag. 
C)  SAS curve rightward; law-making lag 
D)  AD curve rightward; impact lag

Question 8

A structural deficit occurs when the government budget has a deficit

Accepted Answer

A)  even though real GDP is less than potential GDP. 
B)  even though real GDP is greater than structural GDP. 
C)  even though real GDP is equal to potential GDP. 
D)  that is nominal, as opposed to a real budget deficit. 
A)  even though real GDP is less than potential GDP. 
B)  even though real GDP is greater than structural GDP. 
C)  even though real GDP is equal to potential GDP. 
D)  that is nominal, as opposed to a real budget deficit.

Question 9

Discretionary policy requires an act of Congress.

Accepted Answer

A) True 
 B)False

Question 10

Suppose the economy is at a short-run equilibrium with real GDP greater than potential GDP.Which of the following fiscal policies would decrease real GDP and the price level?

Accepted Answer

A)  an increase in government expenditure 
B)  a decrease in taxes 
C)  an increase in taxes 
D)  None of the above answers is correct. 
A)  an increase in government expenditure 
B)  a decrease in taxes 
C)  an increase in taxes 
D)  None of the above answers is correct.

Question 11

A fiscal action that is triggered by the state of the economy is called

Accepted Answer

A)  the government expenditure multiplier. 
B)  discretionary fiscal policy. 
C)  automatic fiscal policy. 
D)  generational fiscal policy. 
A)  the government expenditure multiplier. 
B)  discretionary fiscal policy. 
C)  automatic fiscal policy. 
D)  generational fiscal policy.

Question 12

What is the government expenditure multiplier?

Accepted Answer

The government expenditure multiplier is

Question 13

Which of the following is NOT a government outlay?

Accepted Answer

A)  transfer payments 
B)  expenditure on goods and services 
C)  debt interest on the government's debt 
D)  purchases of foreign bonds 
A)  transfer payments 
B)  expenditure on goods and services 
C)  debt interest on the government's debt 
D)  purchases of foreign bonds

Question 14

The government budget deficit tends to decrease during the expansion phase of a business cycle because tax revenues ________ and government transfer payments ________.

Accepted Answer

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

Question 15

-In the above figure,which fiscal policy could help move the economy to potential GDP?

Accepted Answer

A)  decreasing government expenditure 
B)  decreasing autonomous taxes 
C)  increasing government expenditure 
D)  Both answers A and B are correct. 
A)  decreasing government expenditure 
B)  decreasing autonomous taxes 
C)  increasing government expenditure 
D)  Both answers A and B are correct.

Question 16

If tax revenue equal $1.5 billion and government outlays equal $1.6 billion,then the

Accepted Answer

A)  government budget has a deficit of $0.1 billion. 
B)  government budget has a surplus of $0.1 billion. 
C)  government debt is equal to $0.1 billion. 
D)  government debt declines by $0.1 billion. 
A)  government budget has a deficit of $0.1 billion. 
B)  government budget has a surplus of $0.1 billion. 
C)  government debt is equal to $0.1 billion. 
D)  government debt declines by $0.1 billion.

Question 17

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 1?

Accepted Answer

A)  $0 
B)  $25 billion 
C)  $240 billion 
D)  Not enough information is provided to answer the question. 
A)  $0 
B)  $25 billion 
C)  $240 billion 
D)  Not enough information is provided to answer the question.

Question 18

"European Economic Recovery Plan" "The European Commission urged EU governments to jointly combat the economic slowdown with 200 billion euros ($256 billion) in spending and tax cuts to boost growth and consumer and business confidence." The plan "...would see the 27 EU governments spend 1.5 percent of the bloc's gross domestic product to halt the slowdown that has already pushed some European nations into recession."
Www)iht.com,11/26/2008
The plan is expected to

Accepted Answer

A)  shift the AD curve rightward and increase real GDP. 
B)  shift the AD curve leftward and decrease the recessionary gap. 
C)  decrease the recessionary gap and decrease the price level. 
D)  use the autonomous tax multiplier to eliminate the inflationary gap. 
A)  shift the AD curve rightward and increase real GDP. 
B)  shift the AD curve leftward and decrease the recessionary gap. 
C)  decrease the recessionary gap and decrease the price level. 
D)  use the autonomous tax multiplier to eliminate the inflationary gap.

Question 19

All of the following are part of fiscal policy EXCEPT

Accepted Answer

A)  setting tax rates. 
B)  setting government spending. 
C)  choosing the size of the government deficit. 
D)  controlling the money supply. 
A)  setting tax rates. 
B)  setting government spending. 
C)  choosing the size of the government deficit. 
D)  controlling the money supply.

Question 20

Social Security benefits and expenditures on Medicare and Medicaid are classified as

Accepted Answer

A)  debt interest. 
B)  purchases of goods and services. 
C)  production of goods and services. 
D)  transfer payments. 
A)  debt interest. 
B)  purchases of goods and services. 
C)  production of goods and services. 
D)  transfer payments.

The present value of the government's commitments to pay benefits minus the present value of its tax revenues is called

Automatic fiscal policy occurs

What is automatic fiscal policy? How does it affect the budget deficit and/or budget surplus during a recession and during an expansion?

All developed countries have about the same ratio of government deficit to GDP.

Generational accounting does NOT investigate issues involving

If tax receipts exactly equaled government outlays in a year,the budget deficit would be zero.

A structural deficit occurs when the government budget has a deficit

Discretionary policy requires an act of Congress.

Suppose the economy is at a short-run equilibrium with real GDP greater than potential GDP.Which of the following fiscal policies would decrease real GDP and the price level?

A fiscal action that is triggered by the state of the economy is called

What is the government expenditure multiplier?

Which of the following is NOT a government outlay?

The government budget deficit tends to decrease during the expansion phase of a business cycle because tax revenues and government transfer payments .

-In the above figure,which fiscal policy could help move the economy to potential GDP?

If tax revenue equal $1.5 billion and government outlays equal $1.6 billion,then 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 1?

All of the following are part of fiscal policy EXCEPT

Social Security benefits and expenditures on Medicare and Medicaid are classified as

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 present value of the government's commitments to pay benefits minus the present value of its tax revenues is called

Automatic fiscal policy occurs

What is automatic fiscal policy? How does it affect the budget deficit and/or budget surplus during a recession and during an expansion?

All developed countries have about the same ratio of government deficit to GDP.

Generational accounting does NOT investigate issues involving

If tax receipts exactly equaled government outlays in a year,the budget deficit would be zero.

A structural deficit occurs when the government budget has a deficit

Discretionary policy requires an act of Congress.

Suppose the economy is at a short-run equilibrium with real GDP greater than potential GDP.Which of the following fiscal policies would decrease real GDP and the price level?

A fiscal action that is triggered by the state of the economy is called

What is the government expenditure multiplier?

Which of the following is NOT a government outlay?

The government budget deficit tends to decrease during the expansion phase of a business cycle because tax revenues ________ and government transfer payments ________.

-In the above figure,which fiscal policy could help move the economy to potential GDP?

If tax revenue equal $1.5 billion and government outlays equal $1.6 billion,then 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 1?

All of the following are part of fiscal policy EXCEPT

Social Security benefits and expenditures on Medicare and Medicaid are classified as

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

The government budget deficit tends to decrease during the expansion phase of a business cycle because tax revenues and government transfer payments .