Question 1

What is net tax revenue in excess of government spending on goods and services called?

Accepted Answer

A) Gross tax revenue. 
B) A budget deficit. 
C) A budget surplus. 
D) Transfer payments. 
A) Gross tax revenue. 
B) A budget deficit. 
C) A budget surplus. 
D) Transfer payments.

Question 2

-Refer to the graph above to answer this question.What do both ab and fg represent?

Accepted Answer

A) An inflationary gap. 
B) A recessionary gap. 
C) A budget surplus. 
D) A budget deficit. 
A) An inflationary gap. 
B) A recessionary gap. 
C) A budget surplus. 
D) A budget deficit.

Question 3

What would cause the aggregate demand curve to shift to the right?

Accepted Answer

A) An increase in taxes. 
B) A decrease in government spending on goods and services. 
C) An increase in net tax revenues. 
D) Counter-cyclical fiscal policy used to eliminate recessionary gap. 
A) An increase in taxes. 
B) A decrease in government spending on goods and services. 
C) An increase in net tax revenues. 
D) Counter-cyclical fiscal policy used to eliminate recessionary gap.

Question 4

Graphically,which of the following will be the result of counter-cyclical fiscal policy?

Accepted Answer

A) Only the AS curve will shift. 
B) Both the AS and the potential GDP curves will shift. 
C) There will be a movement along the AS curve. 
D) There will be a movement along both the AS and potential GDP curves. 
A) Only the AS curve will shift. 
B) Both the AS and the potential GDP curves will shift. 
C) There will be a movement along the AS curve. 
D) There will be a movement along both the AS and potential GDP curves.

Question 5

Some economists believe that the economy returns to full-employment equilibrium through a self-adjustment process.Which type of fiscal policy would they support?

Accepted Answer

A) Counter-cyclical. 
B) Balanced-budget 
C) Cyclically balanced budget. 
D) Counter-cyclically balanced budget. 
E) Interventionist. 
A) Counter-cyclical. 
B) Balanced-budget 
C) Cyclically balanced budget. 
D) Counter-cyclically balanced budget. 
E) Interventionist.

Question 6

What is a budget deficit?

Accepted Answer

A) It is government spending of all types in excess of net tax revenue. 
B) It is government spending on goods and services in excess of net tax revenue. 
C) It is government spending of all types plus net tax revenues. 
D) It is the amount by which federal government spending of all types is below net tax revenues. 
A) It is government spending of all types in excess of net tax revenue. 
B) It is government spending on goods and services in excess of net tax revenue. 
C) It is government spending of all types plus net tax revenues. 
D) It is the amount by which federal government spending of all types is below net tax revenues.

Question 7

What was the national debt/GDP ratio in Canada in 2015?

Accepted Answer

A) 10% 
B) 20% 
C) 31% 
D) 100% 
A) 10% 
B) 20% 
C) 31% 
D) 100%

Question 8

What is true about the national debt since the early 1990s?

Accepted Answer

A) It has grown both absolutely and as a percentage of GDP. 
B) It has declined both absolutely and as a percentage of GDP. 
C) It has grown absolutely,but has declined as a percentage of GDP. 
D) It has grown absolutely,but has remained constant as a percentage of GDP. 
E) It has declined absolutely,but has grown as a percentage of GDP. 
A) It has grown both absolutely and as a percentage of GDP. 
B) It has declined both absolutely and as a percentage of GDP. 
C) It has grown absolutely,but has declined as a percentage of GDP. 
D) It has grown absolutely,but has remained constant as a percentage of GDP. 
E) It has declined absolutely,but has grown as a percentage of GDP.

Question 9

Below is some data for a hypothetical economy:
  
-Refer to the information above to answer this question.At equilibrium GDP,what is the value of Xn?

Accepted Answer

A) +2 
B) +5 
C) -2 
D) -5 
A) +2 
B) +5 
C) -2 
D) -5

Question 10

To what group is the largest portion of the national debt owed?

Accepted Answer

A) The Canadian public,that is,individuals,businesses,and banks in Canada. 
B) Foreign individuals,banks,and businesses. 
C) The Bank of Canada. 
D) The Government of Canada. 
A) The Canadian public,that is,individuals,businesses,and banks in Canada. 
B) Foreign individuals,banks,and businesses. 
C) The Bank of Canada. 
D) The Government of Canada.

Question 11

If aggregate demand increases as a result of counter-cyclical fiscal policy,prices will rise and GDP will fall.

Accepted Answer

A) True 
 B)False

Question 12

What is a cyclically balanced-budget fiscal policy?

Accepted Answer

A) A policy of balancing the budget each fiscal year. 
B) A policy of using the budget to balance the economy each fiscal year. 
C) A policy of balancing the budget over the life of the business cycle. 
D) A policy of using the budget to balance the economy over the life of the business cycle. 
A) A policy of balancing the budget each fiscal year. 
B) A policy of using the budget to balance the economy each fiscal year. 
C) A policy of balancing the budget over the life of the business cycle. 
D) A policy of using the budget to balance the economy over the life of the business cycle.

Question 13

How may the public debt impose a burden upon future generations?

Accepted Answer

A) By reducing the current level of private capital accumulation. 
B) By causing future unemployment. 
C) By causing a slowly falling price level. 
D) By causing interest rates to be lower than otherwise. 
A) By reducing the current level of private capital accumulation. 
B) By causing future unemployment. 
C) By causing a slowly falling price level. 
D) By causing interest rates to be lower than otherwise.

Question 14

-Refer to the figure above to answer this question.What is most likely to happen if the level of GDP is Y1 and the government reduces its spending from G1 to G2 in an attempt to balance its budget?

Accepted Answer

A) The budget would be balanced at the new GDP level Y2. 
B) GDP would remain at Y1,but the budget would be in deficit. 
C) GDP would be Y2,and the budget would be in deficit. 
D) GDP would be Y2,and the budget would be in surplus. 
A) The budget would be balanced at the new GDP level Y2. 
B) GDP would remain at Y1,but the budget would be in deficit. 
C) GDP would be Y2,and the budget would be in deficit. 
D) GDP would be Y2,and the budget would be in surplus.

Question 15

Both net tax revenues and government spending on goods and services are a function of GDP.

Accepted Answer

A) True 
 B)False

Question 16

What are automatic stabilizers?

Accepted Answer

A) Imports and exports that automatically change with the state of the economy so as to stabilize the economy. 
B) Investment spending which automatically changes with the state of the economy so as to stabilize the economy. 
C) Tax provisions and government spending programmes that automatically put money into the economy in a recessionary period and take it out in a boom period. 
D) Consumption spending which automatically changes with the state of the economy so as to stabilize the economy. 
A) Imports and exports that automatically change with the state of the economy so as to stabilize the economy. 
B) Investment spending which automatically changes with the state of the economy so as to stabilize the economy. 
C) Tax provisions and government spending programmes that automatically put money into the economy in a recessionary period and take it out in a boom period. 
D) Consumption spending which automatically changes with the state of the economy so as to stabilize the economy.

Question 17

In 2015,in Canada,what was the size of the national debt?

Accepted Answer

A) $200.6 billion 
B) $350.8 billion 
C) $612.3 billion 
D) $873.6 billion 
A) $200.6 billion 
B) $350.8 billion 
C) $612.3 billion 
D) $873.6 billion

Question 18

Can a counter-cyclical fiscal policy ever result in a balanced budget?

Accepted Answer

A) Yes,unless the economy is experiencing a recessionary gap. 
B) Yes,if the economy is experiencing a recessionary gap. 
C) Yes,if the economy is experiencing a recessionary gap with a budget deficit. 
D) Yes,if the economy is experiencing an inflationary gap with a budget deficit. 
E) Never.The goal of counter-cyclical fiscal policy is annual deficits. 
A) Yes,unless the economy is experiencing a recessionary gap. 
B) Yes,if the economy is experiencing a recessionary gap. 
C) Yes,if the economy is experiencing a recessionary gap with a budget deficit. 
D) Yes,if the economy is experiencing an inflationary gap with a budget deficit. 
E) Never.The goal of counter-cyclical fiscal policy is annual deficits.

Question 19

Given the following parameters for the economy of North Happin:
   a)What is the value of equilibrium income?
b)What is the value of the government budget at equilibrium income? Suppose $4,000 is the full employment level of income for North Happin.
c)By how much should the government of North Happin change G to reach full employment? Cannot calculate with the new consumption function

Accepted Answer

a)$3,750
b)Budget su

Question 20

What is the effect of a counter-cyclical fiscal policy?

Accepted Answer

A) It intensifies changes in GDP caused by the business cycle. 
B) It dampens changes in GDP caused by the business cycle. 
C) It has no effect on changes in GDP caused by the business cycle. 
D) It allows the government to balance its budget. 
A) It intensifies changes in GDP caused by the business cycle. 
B) It dampens changes in GDP caused by the business cycle. 
C) It has no effect on changes in GDP caused by the business cycle. 
D) It allows the government to balance its budget.

What is net tax revenue in excess of government spending on goods and services called?

-Refer to the graph above to answer this question.What do both ab and fg represent?

What would cause the aggregate demand curve to shift to the right?

Graphically,which of the following will be the result of counter-cyclical fiscal policy?

Some economists believe that the economy returns to full-employment equilibrium through a self-adjustment process.Which type of fiscal policy would they support?

What is a budget deficit?

What was the national debt/GDP ratio in Canada in 2015?

What is true about the national debt since the early 1990s?

Below is some data for a hypothetical economy: -Refer to the information above to answer this question.At equilibrium GDP,what is the value of Xn?

To what group is the largest portion of the national debt owed?

If aggregate demand increases as a result of counter-cyclical fiscal policy,prices will rise and GDP will fall.

What is a cyclically balanced-budget fiscal policy?

How may the public debt impose a burden upon future generations?

-Refer to the figure above to answer this question.What is most likely to happen if the level of GDP is Y₁ and the government reduces its spending from G₁ to G₂ in an attempt to balance its budget?

Both net tax revenues and government spending on goods and services are a function of GDP.

What are automatic stabilizers?

In 2015,in Canada,what was the size of the national debt?

Can a counter-cyclical fiscal policy ever result in a balanced budget?

What is the effect of a counter-cyclical fiscal policy?

The Economic Problem

Demand and Supply: an Introduction

Measuring the Economy 1: GDP and Economic Growth

Measuring the Economy 2: Unemployment and Inflation

Aggregate Demand and Supply

Aggregate Expenditures

Money and Banking

The Money Market and Monetary Policy

International Trade

Exchange Rates and the Balance of Payments

Macroeconomic Policy Revisited

A Walk Through the Twentieth Century and Beyond

Filters

Exam 7: Fiscal Policy

What is net tax revenue in excess of government spending on goods and services called?

-Refer to the graph above to answer this question.What do both ab and fg represent?

What would cause the aggregate demand curve to shift to the right?

Graphically,which of the following will be the result of counter-cyclical fiscal policy?

Some economists believe that the economy returns to full-employment equilibrium through a self-adjustment process.Which type of fiscal policy would they support?

What is a budget deficit?

What was the national debt/GDP ratio in Canada in 2015?

What is true about the national debt since the early 1990s?

Below is some data for a hypothetical economy: -Refer to the information above to answer this question.At equilibrium GDP,what is the value of Xn?

To what group is the largest portion of the national debt owed?

If aggregate demand increases as a result of counter-cyclical fiscal policy,prices will rise and GDP will fall.

What is a cyclically balanced-budget fiscal policy?

How may the public debt impose a burden upon future generations?

-Refer to the figure above to answer this question.What is most likely to happen if the level of GDP is Y1 and the government reduces its spending from G1 to G2 in an attempt to balance its budget?

Both net tax revenues and government spending on goods and services are a function of GDP.

What are automatic stabilizers?

In 2015,in Canada,what was the size of the national debt?

Can a counter-cyclical fiscal policy ever result in a balanced budget?

What is the effect of a counter-cyclical fiscal policy?

The Economic Problem

Demand and Supply: an Introduction

Measuring the Economy 1: GDP and Economic Growth

Measuring the Economy 2: Unemployment and Inflation

Aggregate Demand and Supply

Aggregate Expenditures

Money and Banking

The Money Market and Monetary Policy

International Trade

Exchange Rates and the Balance of Payments

Macroeconomic Policy Revisited

A Walk Through the Twentieth Century and Beyond

Filters

-Refer to the figure above to answer this question.What is most likely to happen if the level of GDP is Y₁ and the government reduces its spending from G₁ to G₂ in an attempt to balance its budget?