Question 1

Which of the following is the largest source of federal government revenue?

Accepted Answer

A)  corporate income taxes 
B)  Social Security taxes 
C)  personal income taxes 
D)  borrowing 
A)  corporate income taxes 
B)  Social Security taxes 
C)  personal income taxes 
D)  borrowing

Question 2

What is the difference between budget surplus,budget deficit and a balanced budget?
Which of these three budget outcomes is currently the case in the United States?

Accepted Answer

A budget surplus occurs if tax revenues

Question 3

A government incurs a budget deficit when

Accepted Answer

A)  taxes are greater than government outlays. 
B)  taxes are less than government outlays. 
C)  exports are greater than imports. 
D)  exports are less than imports. 
A)  taxes are greater than government outlays. 
B)  taxes are less than government outlays. 
C)  exports are greater than imports. 
D)  exports are less than imports.

Question 4

The budget process includes the

Accepted Answer

A)  President proposing and Congress passing the budget. 
B)  President passing the budget as proposed by Congress. 
C)  House of Representatives proposing and the Senate passing the budget. 
D)  Senate proposing and the House of Representatives passing the budget. 
A)  President proposing and Congress passing the budget. 
B)  President passing the budget as proposed by Congress. 
C)  House of Representatives proposing and the Senate passing the budget. 
D)  Senate proposing and the House of Representatives passing the budget.

Question 5

The stimulus package passed by Congress in 2009 is an example of

Accepted Answer

A)  automatic fiscal policy 
B)  discretionary fiscal policy 
C)  monetary policy 
D)  increased taxation 
A)  automatic fiscal policy 
B)  discretionary fiscal policy 
C)  monetary policy 
D)  increased taxation

Question 6

Fiscal policy includes

Accepted Answer

A)  only decisions related to government expenditure on goods and services. 
B)  only decisions related to government expenditure on goods and services and the value of transfer payments. 
C)  only decisions related to the value of transfer payments and tax revenue. 
D)  decisions related to government expenditure on goods and services, the value of transfer payments, and tax revenue. 
A)  only decisions related to government expenditure on goods and services. 
B)  only decisions related to government expenditure on goods and services and the value of transfer payments. 
C)  only decisions related to the value of transfer payments and tax revenue. 
D)  decisions related to government expenditure on goods and services, the value of transfer payments, and tax revenue.

Question 7

A fall in income that results in a decrease in tax revenues is an example of ________.

Accepted Answer

A)  automatic fiscal policy 
B)  needs-tested tax programs 
C)  a recession 
D)  discretionary fiscal policy 
A)  automatic fiscal policy 
B)  needs-tested tax programs 
C)  a recession 
D)  discretionary fiscal policy

Question 8

When tax revenues exceed outlays,the government has a ________,and when outlays exceed tax revenues,the government has a ________.

Accepted Answer

A)  budget surplus; budget debt 
B)  budget deficit; budget surplus 
C)  budget debt; budget surplus 
D)  budget surplus; budget deficit 
A)  budget surplus; budget debt 
B)  budget deficit; budget surplus 
C)  budget debt; budget surplus 
D)  budget surplus; budget deficit

Question 9

A fiscal action that is initiated by an act of Congress 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 10

Ignoring any supply-side effects,how does the magnitude of the government expenditure multiplier compare to the magnitude of the tax multiplier?
Explain your answer.

Accepted Answer

The magnitude of the government expendit

Question 11

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 structural 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 structural 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 structural deficit.

Question 12

Norway has a lower tax on dividend and interest income than does United Kingdom.We would expect Norway to have a ________ tax wedge and a ________ growth rate of real GDP.

Accepted Answer

A)  smaller; slower 
B)  larger; faster 
C)  larger; slower 
D)  smaller; faster 
A)  smaller; slower 
B)  larger; faster 
C)  larger; slower 
D)  smaller; faster

Question 13

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 3?

Accepted Answer

A)  $15 billion 
B)  $5 billion 
C)  $20 billion 
D)  $260 billion 
A)  $15 billion 
B)  $5 billion 
C)  $20 billion 
D)  $260 billion

Question 14

Corporate income taxes are the largest source of revenue for the federal government.

Accepted Answer

A) True 
 B)False

Question 15

In 2007,Germany increased the value added tax (VAT) on consumption from 16 percent to 19 percent. According to the supply-side view,

Accepted Answer

A)  the incentive to work increases. 
B)  the supply of labor increases. 
C)  there will be an increase in potential GDP due to the increase tax revenue. 
D)  the after-tax wage rate falls. 
A)  the incentive to work increases. 
B)  the supply of labor increases. 
C)  there will be an increase in potential GDP due to the increase tax revenue. 
D)  the after-tax wage rate falls.

Question 16

-Using the above figure,if full employment occurs at $15 trillion and 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 17

Fiscal policy involves

Accepted Answer

A)  the use of interest rates to influence the level of GDP. 
B)  the use of tax and spending policies by the government. 
C)  decreasing the role of the Federal Reserve in the everyday life of the economy. 
D)  the use of tax and money policies by government to influence the level of interest rates. 
A)  the use of interest rates to influence the level of GDP. 
B)  the use of tax and spending policies by the government. 
C)  decreasing the role of the Federal Reserve in the everyday life of the economy. 
D)  the use of tax and money policies by government to influence the level of interest rates.

Question 18

Automatic fiscal policy is not subject to all the same time lags to which discretionary fiscal policy is subject.

Accepted Answer

A) True 
 B)False

Question 19

Government expenditure on goods and services is the largest component of total federal government expenditures.

Accepted Answer

A) True 
 B)False

Question 20

In response to the economic crisis in 2008,President Merkel "highlighted in her speech what the German government has already done: a financial sector rescue package worth up to €500 billion,and a proposed stimulus package of tax breaks [on income] and spending measures aimed at triggering investments of up to €50 billion over the next two years." www.iht.com,11/26/2008
Which parts of the stimulus plan will increase labor supply?

Accepted Answer

A)  financial sector rescue package 
B)  spending measures targeted at investment 
C)  tax breaks 
D)  all of the above 
A)  financial sector rescue package 
B)  spending measures targeted at investment 
C)  tax breaks 
D)  all of the above

Which of the following is the largest source of federal government revenue?

What is the difference between budget surplus,budget deficit and a balanced budget? Which of these three budget outcomes is currently the case in the United States?

A government incurs a budget deficit when

The budget process includes the

The stimulus package passed by Congress in 2009 is an example of

Fiscal policy includes

A fall in income that results in a decrease in tax revenues is an example of ________.

When tax revenues exceed outlays,the government has a ,and when outlays exceed tax revenues,the government has a .

A fiscal action that is initiated by an act of Congress is called

Ignoring any supply-side effects,how does the magnitude of the government expenditure multiplier compare to the magnitude of the tax multiplier? Explain your answer.

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 structural deficit will ________ than had been predicted.

Norway has a lower tax on dividend and interest income than does United Kingdom.We would expect Norway to have a tax wedge and a growth rate of real GDP.

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 3?

Corporate income taxes are the largest source of revenue for the federal government.

In 2007,Germany increased the value added tax (VAT) on consumption from 16 percent to 19 percent. According to the supply-side view,

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

Fiscal policy involves

Automatic fiscal policy is not subject to all the same time lags to which discretionary fiscal policy is subject.

Government expenditure on goods and services is the largest component of total federal government expenditures.

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

Which of the following is the largest source of federal government revenue?

What is the difference between budget surplus,budget deficit and a balanced budget? Which of these three budget outcomes is currently the case in the United States?

A government incurs a budget deficit when

The budget process includes the

The stimulus package passed by Congress in 2009 is an example of

Fiscal policy includes

A fall in income that results in a decrease in tax revenues is an example of ________.

When tax revenues exceed outlays,the government has a ________,and when outlays exceed tax revenues,the government has a ________.

A fiscal action that is initiated by an act of Congress is called

Ignoring any supply-side effects,how does the magnitude of the government expenditure multiplier compare to the magnitude of the tax multiplier? Explain your answer.

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 structural deficit will ________ than had been predicted.

Norway has a lower tax on dividend and interest income than does United Kingdom.We would expect Norway to have a ________ tax wedge and a ________ growth rate of real GDP.

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 3?

Corporate income taxes are the largest source of revenue for the federal government.

In 2007,Germany increased the value added tax (VAT) on consumption from 16 percent to 19 percent. According to the supply-side view,

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

Fiscal policy involves

Automatic fiscal policy is not subject to all the same time lags to which discretionary fiscal policy is subject.

Government expenditure on goods and services is the largest component of total federal government expenditures.

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

When tax revenues exceed outlays,the government has a ,and when outlays exceed tax revenues,the government has a .

Norway has a lower tax on dividend and interest income than does United Kingdom.We would expect Norway to have a tax wedge and a growth rate of real GDP.