Question 1

An income tax ________ potential GDP by shifting the ________ curve ________.

Accepted Answer

A)  increases; labor demand; rightward 
B)  decreases; labor demand; leftward 
C)  increases; labor supply; rightward 
D)  decreases; labor supply; leftward 
A)  increases; labor demand; rightward 
B)  decreases; labor demand; leftward 
C)  increases; labor supply; rightward 
D)  decreases; labor supply; leftward

Question 2

Suppose real GDP exceeds potential GDP. If the government decreases its expenditures on goods and services, then real GDP ________ and the price level ________.

Accepted Answer

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

Question 3

The supply side effects of a cut in tax rates include ________ in the supply of labor and ________ in the supply of loanable funds.

Accepted Answer

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

Question 4

Needs-tested spending ________ during recessions and ________ during expansions.

Accepted Answer

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

Question 5

Expenditures such as Social Security benefits, farm subsidies and grants are considered

Accepted Answer

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

Question 6

-In the above figure, if actual GDP = $17 trillion, there is a budget ________ equal to ________.

Accepted Answer

A)  surplus; $0.2 trillion 
B)  surplus; $1.3 trillion 
C)  deficit; $0.2 trillion 
D)  deficit; $1.1 trillion 
A)  surplus; $0.2 trillion 
B)  surplus; $1.3 trillion 
C)  deficit; $0.2 trillion 
D)  deficit; $1.1 trillion

Question 7

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 8

In order for the United States to have a surplus of exports over imports to repay its international debt, the United States would need to

Accepted Answer

A)  increase consumption and decrease saving. 
B)  increase consumption and increase saving. 
C)  decrease consumption and decrease saving. 
D)  decrease consumption and increase saving. 
A)  increase consumption and decrease saving. 
B)  increase consumption and increase saving. 
C)  decrease consumption and decrease saving. 
D)  decrease consumption and increase saving.

Question 9

-The U.S. federal budget over the past 30 years has been

Accepted Answer

A)  in balance most years. 
B)  in deficit most of the years. 
C)  in surplus most of the years. 
D)  in surplus about half the time and deficit the other half. 
A)  in balance most years. 
B)  in deficit most of the years. 
C)  in surplus most of the years. 
D)  in surplus about half the time and deficit the other half.

Question 10

Fiscal policy attempts to achieve all of the following objectives EXCEPT ________.

Accepted Answer

A)  a stable money supply 
B)  price level stability 
C)  full employment 
D)  sustained economic growth 
A)  a stable money supply 
B)  price level stability 
C)  full employment 
D)  sustained economic growth

Question 11

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 12

If we compare the United States to France, the U.S. tax wedge is ________ the French tax wedge.

Accepted Answer

A)  larger than 
B)  equals to 
C)  smaller than 
D)  not comparable to 
A)  larger than 
B)  equals to 
C)  smaller than 
D)  not comparable to

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 4?

Accepted Answer

A)  -$20 billion (The government has net saving rather than debt.) 
B)  $35 billion 
C)  $5 billion 
D)  $320 billion 
A)  -$20 billion (The government has net saving rather than debt.) 
B)  $35 billion 
C)  $5 billion 
D)  $320 billion

Question 14

In 2014, the federal government of Happy Isle had tax revenues of $1 million, and spent $500,000 on transfer payments, $250,000 on goods and services and $300,000 on debt interest. In 2014, the government of Happy Isle had a ________.

Accepted Answer

A)  balanced budget 
B)  budget deficit of $50,000 
C)  budget surplus of $50,000 
D)  budget deficit of $1,050,000 
A)  balanced budget 
B)  budget deficit of $50,000 
C)  budget surplus of $50,000 
D)  budget deficit of $1,050,000

Question 15

Changes in which of the following is included as part of fiscal policy?

Accepted Answer

A)  the quantity of money 
B)  the level of interest rates 
C)  monetary policy 
D)  tax rates 
A)  the quantity of money 
B)  the level of interest rates 
C)  monetary policy 
D)  tax rates

Question 16

If the government has a balanced budget, the total amount of government debt is

Accepted Answer

A)  increasing. 
B)  decreasing. 
C)  constant. 
D)  zero. 
A)  increasing. 
B)  decreasing. 
C)  constant. 
D)  zero.

Question 17

If taxes exactly equaled government outlays the

Accepted Answer

A)  federal government debt would be zero. 
B)  federal government debt would decrease. 
C)  budget deficit would not change. 
D)  budget deficit would be zero. 
A)  federal government debt would be zero. 
B)  federal government debt would decrease. 
C)  budget deficit would not change. 
D)  budget deficit would be zero.

Question 18

The purpose of the Employment Act of 1946 was to

Accepted Answer

A)  establish goals for the federal government that would promote maximum employment, purchasing power, and production. 
B)  establish an unemployment compensation system. 
C)  set up the Federal Reserve System. 
D)  set targets for the unemployment rate to be achieved by the president. 
A)  establish goals for the federal government that would promote maximum employment, purchasing power, and production. 
B)  establish an unemployment compensation system. 
C)  set up the Federal Reserve System. 
D)  set targets for the unemployment rate to be achieved by the president.

Question 19

-What is the amount of the surplus or deficit incurred in year 5 by the government shown in the above table?

Accepted Answer

A)  $15 billion deficit 
B)  $35 billion surplus 
C)  $5 billion surplus 
D)  $325 billion surplus 
A)  $15 billion deficit 
B)  $35 billion surplus 
C)  $5 billion surplus 
D)  $325 billion surplus

Question 20

What is the government expenditure multiplier?

Accepted Answer

The government expenditure multiplier is

An income tax potential GDP by shifting the curve .

Suppose real GDP exceeds potential GDP. If the government decreases its expenditures on goods and services, then real GDP and the price level .

The supply side effects of a cut in tax rates include in the supply of labor and in the supply of loanable funds.

Needs-tested spending during recessions and during expansions.

Expenditures such as Social Security benefits, farm subsidies and grants are considered

-In the above figure, if actual GDP = $17 trillion, there is a budget equal to .

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

In order for the United States to have a surplus of exports over imports to repay its international debt, the United States would need to

-The U.S. federal budget over the past 30 years has been

Fiscal policy attempts to achieve all of the following objectives EXCEPT ________.

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.

If we compare the United States to France, the U.S. tax wedge is ________ the French tax wedge.

-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 4?

In 2014, the federal government of Happy Isle had tax revenues of $1 million, and spent $500,000 on transfer payments, $250,000 on goods and services and $300,000 on debt interest. In 2014, the government of Happy Isle had a ________.

Changes in which of the following is included as part of fiscal policy?

If the government has a balanced budget, the total amount of government debt is

If taxes exactly equaled government outlays the

The purpose of the Employment Act of 1946 was to

-What is the amount of the surplus or deficit incurred in year 5 by the government shown in the above table?

What is the government expenditure multiplier?

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

An income tax ________ potential GDP by shifting the ________ curve ________.

Suppose real GDP exceeds potential GDP. If the government decreases its expenditures on goods and services, then real GDP ________ and the price level ________.

The supply side effects of a cut in tax rates include ________ in the supply of labor and ________ in the supply of loanable funds.

Needs-tested spending ________ during recessions and ________ during expansions.

Expenditures such as Social Security benefits, farm subsidies and grants are considered

-In the above figure, if actual GDP = $17 trillion, there is a budget ________ equal to ________.

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

In order for the United States to have a surplus of exports over imports to repay its international debt, the United States would need to

-The U.S. federal budget over the past 30 years has been

Fiscal policy attempts to achieve all of the following objectives EXCEPT ________.

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.

If we compare the United States to France, the U.S. tax wedge is ________ the French tax wedge.

-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 4?

In 2014, the federal government of Happy Isle had tax revenues of $1 million, and spent $500,000 on transfer payments, $250,000 on goods and services and $300,000 on debt interest. In 2014, the government of Happy Isle had a ________.

Changes in which of the following is included as part of fiscal policy?

If the government has a balanced budget, the total amount of government debt is

If taxes exactly equaled government outlays the

The purpose of the Employment Act of 1946 was to

-What is the amount of the surplus or deficit incurred in year 5 by the government shown in the above table?

What is the government expenditure multiplier?

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

An income tax potential GDP by shifting the curve .

Suppose real GDP exceeds potential GDP. If the government decreases its expenditures on goods and services, then real GDP and the price level .

The supply side effects of a cut in tax rates include in the supply of labor and in the supply of loanable funds.

Needs-tested spending during recessions and during expansions.

-In the above figure, if actual GDP = $17 trillion, there is a budget equal to .