Question 1

-In the above figure,if the economy is initially at point B and taxes are raised,if potential GDP does not change then the economy will move to point

Accepted Answer

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

Question 2

An increase in taxes on labor income ________ the labor supply curve and ________ the labor demand curve.

Accepted Answer

A)  shifts; does not shift 
B)  shifts; shifts 
C)  does not shift; does not shift 
D)  does not shift; shifts 
A)  shifts; does not shift 
B)  shifts; shifts 
C)  does not shift; does not shift 
D)  does not shift; shifts

Question 3

What is needs-tested spending and how does it affect the government expenditure multiplier?

Accepted Answer

Needs-tested spending is government spen

Question 4

-In the above figure,

Accepted Answer

A)  the structural deficit equals zero. 
B)  any surpluses are cyclical surpluses. 
C)  any deficits are cyclical deficits. 
D)  All of the above answers are correct. 
A)  the structural deficit equals zero. 
B)  any surpluses are cyclical surpluses. 
C)  any deficits are cyclical deficits. 
D)  All of the above answers are correct.

Question 5

In response to the economic downturn,New Zealand's government had enacted a $3.8 stimulus package. www.iht.com,11/26/2008
The stimulus plan is considered

Accepted Answer

A)  automatic fiscal policy. 
B)  contractionary fiscal policy. 
C)  discretionary fiscal policy. 
D)  needs-tested spending. 
A)  automatic fiscal policy. 
B)  contractionary fiscal policy. 
C)  discretionary fiscal policy. 
D)  needs-tested spending.

Question 6

What is the Laffer curve?
Where on their Laffer curves are the United States,the United Kingdom and France located?

Accepted Answer

The Laffer curve is graphed with tax rev

Question 7

When the economy grows,________ increase because real GDP ________.

Accepted Answer

A)  tax revenues; decreases 
B)  tax revenues; increases 
C)  structural deficits; decreases 
D)  recognition lags; increases 
A)  tax revenues; decreases 
B)  tax revenues; increases 
C)  structural deficits; decreases 
D)  recognition lags; increases

Question 8

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

Accepted Answer

A)  $900 
B)  $1125 
C)  $725 
D)  $1700 
A)  $900 
B)  $1125 
C)  $725 
D)  $1700

Question 9

Looking at the supply-side effects on aggregate supply shows that a tax hike on labor income

Accepted Answer

A)  weakens the incentive to work. 
B)  decreases potential GDP. 
C)  increases potential GDP because people work more to pay the higher taxes. 
D)  Both answers A and B are correct. 
A)  weakens the incentive to work. 
B)  decreases potential GDP. 
C)  increases potential GDP because people work more to pay the higher taxes. 
D)  Both answers A and B are correct.

Question 10

If the economy falls into a recession,which of the following responses constitutes the use of automatic fiscal policy?

Accepted Answer

A)  an income tax cut voted on by Congress and quickly signed by the President 
B)  an existing system to make government payments to the growing ranks of unemployed workers 
C)  a new program to fund local governments' hiring of 100,000 street sweepers within a year 
D)  All of the above answers are correct. 
A)  an income tax cut voted on by Congress and quickly signed by the President 
B)  an existing system to make government payments to the growing ranks of unemployed workers 
C)  a new program to fund local governments' hiring of 100,000 street sweepers within a year 
D)  All of the above answers are correct.

Question 11

The sum of past budget deficits minus the sum of past budget surpluses refers to

Accepted Answer

A)  the national debt. 
B)  the cyclically unbalanced budget. 
C)  the structural national debt. 
D)  the federal government net worth. 
A)  the national debt. 
B)  the cyclically unbalanced budget. 
C)  the structural national debt. 
D)  the federal government net worth.

Question 12

An example of automatic fiscal policy is when

Accepted Answer

A)  tax revenues decrease as real GDP decreases. 
B)  Congress passes a law that raises tax rates. 
C)  Congress decides to cut government expenditure. 
D)  the president drafts a bill to reduce defense spending. 
A)  tax revenues decrease as real GDP decreases. 
B)  Congress passes a law that raises tax rates. 
C)  Congress decides to cut government expenditure. 
D)  the president drafts a bill to reduce defense spending.

Question 13

-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 recessionary gap occurs when real GDP

Question 14

The Council of Economic Advisers

Accepted Answer

A)  proposes the president's budget each year. 
B)  approves fiscal policy changes. 
C)  helps the president and the public stay informed about the state of the economy. 
D)  helps the president make changes in monetary policy. 
A)  proposes the president's budget each year. 
B)  approves fiscal policy changes. 
C)  helps the president and the public stay informed about the state of the economy. 
D)  helps the president make changes in monetary policy.

Question 15

Which branches of the government play a role in the enacting the federal budget?
I. the President.
II. the House of Representatives.
III. the Senate.

Accepted Answer

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

Question 16

During the Reagan administration in the 1980s,tax rates were ________ and the budget deficit ________.

Accepted Answer

A)  raised; increased 
B)  raised; decreased 
C)  cut; increased 
D)  cut; decreased 
A)  raised; increased 
B)  raised; decreased 
C)  cut; increased 
D)  cut; decreased

Question 17

$$\begin{array} { | c | c | c | } 
\hline \text { Year } & \begin{array} { c } 
\text { Government } \
\text { outlays } \
\text { trillions of } \
\text { 2005 dollars) }
\end{array} & \begin{array} { c } 
\text { Tax receipts } \
\text { (trillions of } \
\text { 2005 dollars) }
\end{array} \
\hline 2007 & 0.75 & 0.80 \
\hline 2008 & 0.80 & 0.83 \
\hline 2009 & 0.87 & 0.86 \
\hline 2010 & 0.95 & 0.95 \
\hline 2011 & 1.06 & 1.02 \
\hline
\end{array}$$
-The above table gives a country's government outlays and tax receipts for 2007 through 2011.During which years did the country have a balanced budget,budget surplus,and budget deficit?

Accepted Answer

The country had a balanced budget in 201

Question 18

In 2007,France's government had revenue of $1.287 trillion while expenditures totalled $1.356 trillion. GDP was $2.56 trillion.In 2007,the government budget balance was ________ and government debt ________.

Accepted Answer

A)  -$0.69 billion; increased 
B)  $1.27 trillion; increased 
C)  $0.69 billion; decreased 
D)  $1.02 trillion; decreased 
A)  -$0.69 billion; increased 
B)  $1.27 trillion; increased 
C)  $0.69 billion; decreased 
D)  $1.02 trillion; decreased

Question 19

An increase in the tax rates as a result of a new tax law passed by Congress is an example of ________.

Accepted Answer

A)  discretionary fiscal policy 
B)  increasing the government debt 
C)  increasing the government deficit 
D)  needs-tested taxing change. 
A)  discretionary fiscal policy 
B)  increasing the government debt 
C)  increasing the government deficit 
D)  needs-tested taxing change.

Question 20

The structural surplus

Accepted Answer

A)  equals the actual surplus plus the cyclical surplus. 
B)  is the government budget surplus that would exist if the economy was at potential GDP. 
C)  is, by definition, equal to the negative of the cyclical deficit. 
D)  is legally required to be positive. 
A)  equals the actual surplus plus the cyclical surplus. 
B)  is the government budget surplus that would exist if the economy was at potential GDP. 
C)  is, by definition, equal to the negative of the cyclical deficit. 
D)  is legally required to be positive.

-In the above figure,if the economy is initially at point B and taxes are raised,if potential GDP does not change then the economy will move to point

An increase in taxes on labor income the labor supply curve and the labor demand curve.

What is needs-tested spending and how does it affect the government expenditure multiplier?

-In the above figure,

In response to the economic downturn,New Zealand's government had enacted a $3.8 stimulus package. www.iht.com,11/26/2008 The stimulus plan is considered

What is the Laffer curve? Where on their Laffer curves are the United States,the United Kingdom and France located?

When the economy grows, increase because real GDP .

Looking at the supply-side effects on aggregate supply shows that a tax hike on labor income

If the economy falls into a recession,which of the following responses constitutes the use of automatic fiscal policy?

The sum of past budget deficits minus the sum of past budget surpluses refers to

An example of automatic fiscal policy is when

-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?

The Council of Economic Advisers

Which branches of the government play a role in the enacting the federal budget? I. the President. II. the House of Representatives. III. the Senate.

During the Reagan administration in the 1980s,tax rates were and the budget deficit .

In 2007,France's government had revenue of $1.287 trillion while expenditures totalled $1.356 trillion. GDP was $2.56 trillion.In 2007,the government budget balance was and government debt .

An increase in the tax rates as a result of a new tax law passed by Congress is an example of ________.

The structural surplus

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

-In the above figure,if the economy is initially at point B and taxes are raised,if potential GDP does not change then the economy will move to point

An increase in taxes on labor income ________ the labor supply curve and ________ the labor demand curve.

What is needs-tested spending and how does it affect the government expenditure multiplier?

-In the above figure,

In response to the economic downturn,New Zealand's government had enacted a $3.8 stimulus package. www.iht.com,11/26/2008 The stimulus plan is considered

What is the Laffer curve? Where on their Laffer curves are the United States,the United Kingdom and France located?

When the economy grows,________ increase because real GDP ________.

Looking at the supply-side effects on aggregate supply shows that a tax hike on labor income

If the economy falls into a recession,which of the following responses constitutes the use of automatic fiscal policy?

The sum of past budget deficits minus the sum of past budget surpluses refers to

An example of automatic fiscal policy is when

-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?

The Council of Economic Advisers

Which branches of the government play a role in the enacting the federal budget? I. the President. II. the House of Representatives. III. the Senate.

During the Reagan administration in the 1980s,tax rates were ________ and the budget deficit ________.

In 2007,France's government had revenue of $1.287 trillion while expenditures totalled $1.356 trillion. GDP was $2.56 trillion.In 2007,the government budget balance was ________ and government debt ________.

An increase in the tax rates as a result of a new tax law passed by Congress is an example of ________.

The structural surplus

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 increase in taxes on labor income the labor supply curve and the labor demand curve.

When the economy grows, increase because real GDP .

During the Reagan administration in the 1980s,tax rates were and the budget deficit .

In 2007,France's government had revenue of $1.287 trillion while expenditures totalled $1.356 trillion. GDP was $2.56 trillion.In 2007,the government budget balance was and government debt .