Question 1

-Using the above figure, if full employment occurs at $17 trillion and the economy is actually producing $17 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 2

The government receives tax revenues from several sources. Rank the following sources from largest to the smallest.
I.corporate income taxes
II.personal income taxes
III.Social Security taxes

Accepted Answer

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

Question 3

In order for the United States to repay its international debt, the United States would need to

Accepted Answer

A)  have a current account deficit. 
B)  cut taxes. 
C)  have a surplus of imports over exports. 
D)  have a surplus of exports over imports. 
A)  have a current account deficit. 
B)  cut taxes. 
C)  have a surplus of imports over exports. 
D)  have a surplus of exports over imports.

Question 4

Spending on programs that result in transfer payments that depend on the economic state of individuals and businesses is called ________.

Accepted Answer

A)  transfer spending 
B)  welfare 
C)  needs-tested spending 
D)  business subsidies 
A)  transfer spending 
B)  welfare 
C)  needs-tested spending 
D)  business subsidies

Question 5

"The federal budget is required by law to balance." Is the previous statement correct or incorrect?

Accepted Answer

The statement is incorrect bec

Question 6

What is the largest source of revenue for the federal government?

Accepted Answer

A)  Social Security taxes 
B)  corporate income taxes 
C)  personal income taxes 
D)  sales tax 
A)  Social Security taxes 
B)  corporate income taxes 
C)  personal income taxes 
D)  sales tax

Question 7

Because of automatic fiscal policy, when real GDP decreases

Accepted Answer

A)  government expenditures decrease and tax revenues increase. 
B)  government expenditures increase and tax revenues decrease. 
C)  government expenditures equal tax revenues. 
D)  the economy will automatically go to full employment. 
A)  government expenditures decrease and tax revenues increase. 
B)  government expenditures increase and tax revenues decrease. 
C)  government expenditures equal tax revenues. 
D)  the economy will automatically go to full employment.

Question 8

The structural deficit is that deficit that would exist

Accepted Answer

A)  with the taxes and outlays that would occur if the economy was at the equilibrium level of real GDP. 
B)  with the taxes and outlays that would occur if the economy was at the full employment level of real GDP. 
C)  if tax rates were set to maximize tax revenues. 
D)  if there were no discretionary fiscal interventions into the economy. 
A)  with the taxes and outlays that would occur if the economy was at the equilibrium level of real GDP. 
B)  with the taxes and outlays that would occur if the economy was at the full employment level of real GDP. 
C)  if tax rates were set to maximize tax revenues. 
D)  if there were no discretionary fiscal interventions into the economy.

Question 9

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 10

-Using the above figure, if full employment occurs at $16 trillion, but the economy is actually producing $17 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 11

The budget deficit

Accepted Answer

A)  is the total outstanding borrowing by the government. 
B)  is the difference between government outlays and tax revenues. 
C)  decreased during the Obama Administration. 
D)  reached its peak in the year 2000. 
A)  is the total outstanding borrowing by the government. 
B)  is the difference between government outlays and tax revenues. 
C)  decreased during the Obama Administration. 
D)  reached its peak in the year 2000.

Question 12

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 13

Discretionary policy requires an act of Congress.

Accepted Answer

A) True 
 B)False

Question 14

In January 2013 the Social Security payroll tax increased by 2 percentage points. This rise in the Social Security payroll tax ________ the U.S tax wedge.

Accepted Answer

A)  decreased 
B)  did not change 
C)  increased 
D)  More information about the total amount of the tax is needed to determine the impact on the tax wedge. 
A)  decreased 
B)  did not change 
C)  increased 
D)  More information about the total amount of the tax is needed to determine the impact on the tax wedge.

Question 15

The structural deficit is the deficit that occurs when

Accepted Answer

A)  real GDP departs from potential GDP. 
B)  real GDP equals potential GDP. 
C)  aggregate demand is greater than short-run aggregate supply. 
D)  short-run aggregate supply is greater than aggregate demand. 
A)  real GDP departs from potential GDP. 
B)  real GDP equals potential GDP. 
C)  aggregate demand is greater than short-run aggregate supply. 
D)  short-run aggregate supply is greater than aggregate demand.

Question 16

An increase in taxes on labor income shifts the labor supply curve leftward and the after-tax wage rate falls.

Accepted Answer

A) True 
 B)False

Question 17

The use of fiscal policy is limited because

Accepted Answer

A)  there is never a long enough time lag. 
B)  the economy is almost always at full employment. 
C)  the President may have different goals than Congress. 
D)  time lags associated with fiscal policy may cause the policy to take effect too late to solve the problem it was supposed to address. 
A)  there is never a long enough time lag. 
B)  the economy is almost always at full employment. 
C)  the President may have different goals than Congress. 
D)  time lags associated with fiscal policy may cause the policy to take effect too late to solve the problem it was supposed to address.

Question 18

If the government wants to engage in fiscal policy to increase real GDP, it could

Accepted Answer

A)  increase government expenditure in order to increase short-run aggregate supply. 
B)  decrease government expenditure in order to increase short-run aggregate supply. 
C)  increase government expenditure in order to increase aggregate demand. 
D)  decrease government expenditure in order to decrease aggregate demand. 
A)  increase government expenditure in order to increase short-run aggregate supply. 
B)  decrease government expenditure in order to increase short-run aggregate supply. 
C)  increase government expenditure in order to increase aggregate demand. 
D)  decrease government expenditure in order to decrease aggregate demand.

Question 19

The government's budget deficit or surplus equals the

Accepted Answer

A)  change in outlays divided by change in revenue. 
B)  average outlay divided by average revenue. 
C)  change in revenue minus change in outlays. 
D)  total tax revenue minus total government outlays. 
A)  change in outlays divided by change in revenue. 
B)  average outlay divided by average revenue. 
C)  change in revenue minus change in outlays. 
D)  total tax revenue minus total government outlays.

Question 20

In December 2012 the structural deficit was estimated to be $325 billion and the cyclical deficit was estimated to be $700 billion. That means that the actual budget deficit equaled ________ billion.

Accepted Answer

A)  $1,025 
B)  $375 
C)  $700 
D)  None of the above answers are correct. 
A)  $1,025 
B)  $375 
C)  $700 
D)  None of the above answers are correct.

-Using the above figure, if full employment occurs at $17 trillion and the economy is actually producing $17 trillion, then there is a

The government receives tax revenues from several sources. Rank the following sources from largest to the smallest. I.corporate income taxes II.personal income taxes III.Social Security taxes

In order for the United States to repay its international debt, the United States would need to

Spending on programs that result in transfer payments that depend on the economic state of individuals and businesses is called ________.

"The federal budget is required by law to balance." Is the previous statement correct or incorrect?

What is the largest source of revenue for the federal government?

Because of automatic fiscal policy, when real GDP decreases

The structural deficit is that deficit that would exist

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

-Using the above figure, if full employment occurs at $16 trillion, but the economy is actually producing $17 trillion, then there is a

The budget deficit

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

Discretionary policy requires an act of Congress.

In January 2013 the Social Security payroll tax increased by 2 percentage points. This rise in the Social Security payroll tax ________ the U.S tax wedge.

The structural deficit is the deficit that occurs when

An increase in taxes on labor income shifts the labor supply curve leftward and the after-tax wage rate falls.

The use of fiscal policy is limited because

If the government wants to engage in fiscal policy to increase real GDP, it could

The government's budget deficit or surplus equals the

In December 2012 the structural deficit was estimated to be $325 billion and the cyclical deficit was estimated to be $700 billion. That means that the actual budget deficit equaled ________ billion.

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

-Using the above figure, if full employment occurs at $17 trillion and the economy is actually producing $17 trillion, then there is a

The government receives tax revenues from several sources. Rank the following sources from largest to the smallest. I.corporate income taxes II.personal income taxes III.Social Security taxes

In order for the United States to repay its international debt, the United States would need to

Spending on programs that result in transfer payments that depend on the economic state of individuals and businesses is called ________.

"The federal budget is required by law to balance." Is the previous statement correct or incorrect?

What is the largest source of revenue for the federal government?

Because of automatic fiscal policy, when real GDP decreases

The structural deficit is that deficit that would exist

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

-Using the above figure, if full employment occurs at $16 trillion, but the economy is actually producing $17 trillion, then there is a

The budget deficit

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

Discretionary policy requires an act of Congress.

In January 2013 the Social Security payroll tax increased by 2 percentage points. This rise in the Social Security payroll tax ________ the U.S tax wedge.

The structural deficit is the deficit that occurs when

An increase in taxes on labor income shifts the labor supply curve leftward and the after-tax wage rate falls.

The use of fiscal policy is limited because

If the government wants to engage in fiscal policy to increase real GDP, it could

The government's budget deficit or surplus equals the

In December 2012 the structural deficit was estimated to be $325 billion and the cyclical deficit was estimated to be $700 billion. That means that the actual budget deficit equaled ________ billion.

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