Question 1

-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 2

Tax revenues ________ during recessions and ________ during expansions.

Accepted Answer

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

Question 3

The aggregate demand curve shifts rightward if there is

Accepted Answer

A)  an increase in tax rates. 
B)  a decrease in government expenditure. 
C)  an increase in the federal budget surplus. 
D)  an increase in government expenditure. 
A)  an increase in tax rates. 
B)  a decrease in government expenditure. 
C)  an increase in the federal budget surplus. 
D)  an increase in government expenditure.

Question 4

According to the Laffer curve, raising the tax rate

Accepted Answer

A)  always increases the amount of tax revenue. 
B)  always decreases the amount of tax revenue. 
C)  does not change the amount of tax revenue. 
D)  might increase, decrease, or not change the amount of tax revenue. 
A)  always increases the amount of tax revenue. 
B)  always decreases the amount of tax revenue. 
C)  does not change the amount of tax revenue. 
D)  might increase, decrease, or not change the amount of tax revenue.

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

"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
Which of the following describe the EU's plan?
i.It is discretionary fiscal policy
iI.It will generate a cyclical surplus.

Accepted Answer

A)  I and II 
B)  II only 
C)  I only 
D)  neither I nor II 
A)  I and II 
B)  II only 
C)  I only 
D)  neither I nor II

Question 7

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 8

If the government's budget is in surplus even when the economy is at full employment, the surplus is said to be

Accepted Answer

A)  persisting. 
B)  cyclical. 
C)  discretionary. 
D)  structural. 
A)  persisting. 
B)  cyclical. 
C)  discretionary. 
D)  structural.

Question 9

According to the Laffer Curve, the amount of tax revenue _______when tax rates are ________ and tax rates are ________.

Accepted Answer

A)  increases,; low; increased 
B)  increases; high; increased 
C)  decreases; low; increased 
D)  decreases; high; decreased 
A)  increases,; low; increased 
B)  increases; high; increased 
C)  decreases; low; increased 
D)  decreases; high; decreased

Question 10

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 11

The main goal of fiscal policy is to produce a balanced budget.

Accepted Answer

A) True 
 B)False

Question 12

A fiscal stimulus is used to increase production and employment.

Accepted Answer

A) True 
 B)False

Question 13

According to the Laffer Curve, when tax rates are low, there is ________relationship between them and tax revenue.

Accepted Answer

A)  a positive 
B)  a negative 
C)  sometimes a positive, sometimes a negative 
D)  an indeterminate 
A)  a positive 
B)  a negative 
C)  sometimes a positive, sometimes a negative 
D)  an indeterminate

Question 14

The structural deficit or surplus is the

Accepted Answer

A)  difference between actual government outlays and actual government receipts. 
B)  change in national debt that will result from current budgetary policies. 
C)  government budget deficit or surplus that would occur if the economy were at potential GDP. 
D)  actual government budget deficit or surplus minus expenditures for capital improvements. 
A)  difference between actual government outlays and actual government receipts. 
B)  change in national debt that will result from current budgetary policies. 
C)  government budget deficit or surplus that would occur if the economy were at potential GDP. 
D)  actual government budget deficit or surplus minus expenditures for capital improvements.

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

-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 17

Tax revenues

Accepted Answer

A)  are autonomous. 
B)  are independent of real GDP. 
C)  vary with real GDP. 
D)  are fixed over time. 
A)  are autonomous. 
B)  are independent of real GDP. 
C)  vary with real GDP. 
D)  are fixed over time.

Question 18

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 19

If the budget deficit is $50 billion and the structural deficit is $10 billion, the cyclical deficit is

Accepted Answer

A)  $10 billion. 
B)  $40 billion. 
C)  $60 billion. 
D)  $50 billion 
A)  $10 billion. 
B)  $40 billion. 
C)  $60 billion. 
D)  $50 billion

Question 20

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

Accepted Answer

A) True 
 B)False

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

Tax revenues during recessions and during expansions.

The aggregate demand curve shifts rightward if there is

According to the Laffer curve, raising the tax rate

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

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

If the government's budget is in surplus even when the economy is at full employment, the surplus is said to be

According to the Laffer Curve, the amount of tax revenue _when tax rates are and tax rates are __.

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

The main goal of fiscal policy is to produce a balanced budget.

A fiscal stimulus is used to increase production and employment.

According to the Laffer Curve, when tax rates are low, there is ________relationship between them and tax revenue.

The structural deficit or surplus is the

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

-In the above figure

Tax revenues

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

If the budget deficit is $50 billion and the structural deficit is $10 billion, the cyclical deficit is

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

The Business Cycle, Inflation, and Deflation

Monetary Policy

International Trade Policy

Filters

Exam 13: Fiscal Policy

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

Tax revenues ________ during recessions and ________ during expansions.

The aggregate demand curve shifts rightward if there is

According to the Laffer curve, raising the tax rate

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

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

If the government's budget is in surplus even when the economy is at full employment, the surplus is said to be

According to the Laffer Curve, the amount of tax revenue _______when tax rates are ________ and tax rates are ________.

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

The main goal of fiscal policy is to produce a balanced budget.

A fiscal stimulus is used to increase production and employment.

According to the Laffer Curve, when tax rates are low, there is ________relationship between them and tax revenue.

The structural deficit or surplus is the

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

-In the above figure

Tax revenues

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

If the budget deficit is $50 billion and the structural deficit is $10 billion, the cyclical deficit is

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

The Business Cycle, Inflation, and Deflation

Monetary Policy

International Trade Policy

Filters

Tax revenues during recessions and during expansions.

According to the Laffer Curve, the amount of tax revenue _when tax rates are and tax rates are __.

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

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