Question 1

Australian microeconomic reforms can be viewed as:

Accepted Answer

A)  new demand-side reforms. 
B)  strictly political decision. 
C)  supply-side fiscal policies. 
D)  unnecessary spending. 
A)  new demand-side reforms. 
B)  strictly political decision. 
C)  supply-side fiscal policies. 
D)  unnecessary spending.

Question 2

The following is important when interpreting the federal budget:

Accepted Answer

A)  The wages in a specific industry. 
B)  The introduction of competition in the markets. 
C)  Only the total deficit/surplus figure. 
D)  The actual pattern of expenditure and revenue in attrition to the deficit/surplus figure. 
A)  The wages in a specific industry. 
B)  The introduction of competition in the markets. 
C)  Only the total deficit/surplus figure. 
D)  The actual pattern of expenditure and revenue in attrition to the deficit/surplus figure.

Question 3

If the MPC is 0.6 and if the goal is to increase real GDP by $200 million, then by how much would government spending have to change to generate this increase in real GDP?

Accepted Answer

A)  $240 million. 
B)  $200 million. 
C)  $180 million. 
D)  $80 million. 
A)  $240 million. 
B)  $200 million. 
C)  $180 million. 
D)  $80 million.

Question 4

The RBA purchase of securities issued by the government is known as:

Accepted Answer

A)  debt financing. 
B)  money financing. 
C)  national debt. 
D)  private debt. 
A)  debt financing. 
B)  money financing. 
C)  national debt. 
D)  private debt.

Question 5

Which of the following is true?

Accepted Answer

A)  National debt is not a burden if it is held by overseas interests. 
B)  National debt redistributes income from taxpayers to those holding government
Securities. 
C)  National debt increases when the RBA buys securities from the government. 
D)  National debt imposes an unfair burden on the current generation. 
A)  National debt is not a burden if it is held by overseas interests. 
B)  National debt redistributes income from taxpayers to those holding government
Securities. 
C)  National debt increases when the RBA buys securities from the government. 
D)  National debt imposes an unfair burden on the current generation.

Question 6

Narrbegin Exhibit 17.1 Aggregate demand and supply model  
-Beginning at equilibrium E1 in Exhibit 17.1, when the government increases spending or cuts taxes the economy will experience:

Accepted Answer

A)  an inflationary recession. 
B)  stagflation. 
C)  cost-push inflation. 
D)  demand-pull inflation. 
A)  an inflationary recession. 
B)  stagflation. 
C)  cost-push inflation. 
D)  demand-pull inflation.

Question 7

When a federal budget deficit causes crowding out:

Accepted Answer

A)  real GDP does not increase by as much as the government purchases of goods and services multiplier would predict because bond-holders' saving declines. 
B)  real GDP does not increase by as much as the government purchases of goods and services multiplier would predict because investment declines. 
C)  interest rates fall, reducing the burden of the debt. 
D)  interest rates fall, bringing the current deficit back down. 
A)  real GDP does not increase by as much as the government purchases of goods and services multiplier would predict because bond-holders' saving declines. 
B)  real GDP does not increase by as much as the government purchases of goods and services multiplier would predict because investment declines. 
C)  interest rates fall, reducing the burden of the debt. 
D)  interest rates fall, bringing the current deficit back down.

Question 8

Suppose inflation is a threat because the current aggregate demand curve will increase by $600 billion at any price level. If the marginal propensity to consume is 0.75, federal policymakers can follow Keynesian economics and restrain inflation by:

Accepted Answer

A)  decreasing tax revenues by $600 billion. 
B)  decreasing transfer payments by $200 billion. 
C)  increasing tax revenues by $200 billion. 
D)  increasing government purchases by $150 billion. 
A)  decreasing tax revenues by $600 billion. 
B)  decreasing transfer payments by $200 billion. 
C)  increasing tax revenues by $200 billion. 
D)  increasing government purchases by $150 billion.

Question 9

A country's national debt is:

Accepted Answer

A)  not held by the central bank. 
B)  partially held by the central bank. 
C)  fully held by the central bank. 
D)  fully held by the foreign banks. 
A)  not held by the central bank. 
B)  partially held by the central bank. 
C)  fully held by the central bank. 
D)  fully held by the foreign banks.

Question 10

It is inflationary for government to increase spending if:

Accepted Answer

A)  it also cuts taxes. 
B)  the aggregate supply curve is flat. 
C)  the economy is at full employment. 
D)  the equilibrium real GDP is well below full employment. 
A)  it also cuts taxes. 
B)  the aggregate supply curve is flat. 
C)  the economy is at full employment. 
D)  the equilibrium real GDP is well below full employment.

Question 11

If the government issues securities in order to finance current consumption, then:

Accepted Answer

A)  it may be a burden to future generations if the securities were bought by foreign interests. 
B)  it may be a burden as current generations need to pay for the interest repayments without any improvement in the country's productive capacity. 
C)  it will not be a burden if the securities were bought by foreign interests. 
D)  it will not be a burden if the debt is held domestically. 
A)  it may be a burden to future generations if the securities were bought by foreign interests. 
B)  it may be a burden as current generations need to pay for the interest repayments without any improvement in the country's productive capacity. 
C)  it will not be a burden if the securities were bought by foreign interests. 
D)  it will not be a burden if the debt is held domestically.

Question 12

Assume the economy is in recession and real GDP is below full employment. The marginal propensity to consume (MPC) is 0.75 and the government follows Keynesian economics by using expansionary fiscal policy to increase aggregate demand (total spending). If an increase of $1000 billion aggregate demand can restore full employment, the government should:

Accepted Answer

A)  decrease spending by $750 billion. 
B)  increase spending by $750 billion. 
C)  increase spending by $1000 billion. 
D)  increase spending by $250 billion. 
A)  decrease spending by $750 billion. 
B)  increase spending by $750 billion. 
C)  increase spending by $1000 billion. 
D)  increase spending by $250 billion.

Question 13

Equal increases in government expenditures and taxes will:

Accepted Answer

A)  cancel each other out so that the equilibrium level of output will remain unchanged. 
B)  lead to an equal decrease in the equilibrium level of output. 
C)  lead to an equal increase in the equilibrium level of output. 
D)  lead to an increase in the equilibrium level of real GDP output that is larger than the initial change in government expenditures and taxes. 
A)  cancel each other out so that the equilibrium level of output will remain unchanged. 
B)  lead to an equal decrease in the equilibrium level of output. 
C)  lead to an equal increase in the equilibrium level of output. 
D)  lead to an increase in the equilibrium level of real GDP output that is larger than the initial change in government expenditures and taxes.

Question 14

If the national debt is owed _____, then the burden of the debt will fall disproportionately on _____.

Accepted Answer

A)  domestically; overseas interests 
B)  overseas; overseas interests 
C)  domestically; future generations 
D)  overseas; future generations 
A)  domestically; overseas interests 
B)  overseas; overseas interests 
C)  domestically; future generations 
D)  overseas; future generations

Question 15

Because of the automatic stabilisers, a decline in the level of economic activity will cause:

Accepted Answer

A)  an increase in tax revenues collected. 
B)  a decrease in government expenditures. 
C)  a smaller budget deficit. 
D)  an increase in welfare payments. 
A)  an increase in tax revenues collected. 
B)  a decrease in government expenditures. 
C)  a smaller budget deficit. 
D)  an increase in welfare payments.

Question 16

Unemployment benefits act as automatic stabilisers by:

Accepted Answer

A)  allowing for more consumer spending during prosperity. 
B)  increasing spending during a recession. 
C)  making the unemployment rate worse during a recession. 
D)  allowing for less consumer spending during a recession. 
A)  allowing for more consumer spending during prosperity. 
B)  increasing spending during a recession. 
C)  making the unemployment rate worse during a recession. 
D)  allowing for less consumer spending during a recession.

Question 17

Narrbegin Exhibit 17.2 Aggregate demand and supply model   
-Suppose the economy in Exhibit 17.2 is in equilibrium at point E1 and the marginal propensity to consume (MPC) is 0.75. Following Keynesian economics, the federal government can move the economy to point E2 and reduce inflation by:

Accepted Answer

A)  increasing government tax revenue by $6 billion. 
B)  decreasing government tax revenue by $6.1 billion. 
C)  decreasing government tax revenue by $200 billion. 
D)  increasing government tax revenue by approximately $66 billion. 
A)  increasing government tax revenue by $6 billion. 
B)  decreasing government tax revenue by $6.1 billion. 
C)  decreasing government tax revenue by $200 billion. 
D)  increasing government tax revenue by approximately $66 billion.

Question 18

The objectives of the GST in Australia were to:

Accepted Answer

A)  reduce the range of goods and services attracting tax. 
B)  discourage increased rates of community saving by taxing income when it was spent rather than when it was earned. 
C)  reduce the reliance on income taxation in government revenue raising. 
D)  increase the ability of individuals to avoid paying their taxes. 
A)  reduce the range of goods and services attracting tax. 
B)  discourage increased rates of community saving by taxing income when it was spent rather than when it was earned. 
C)  reduce the reliance on income taxation in government revenue raising. 
D)  increase the ability of individuals to avoid paying their taxes.

Question 19

If the treasurer announces a large, expected budget deficit for the forthcoming year, this is a sign that the government's fiscal stance will be:

Accepted Answer

A)  expansionary. 
B)  contractionary. 
C)  neutral. 
D)  negative. 
A)  expansionary. 
B)  contractionary. 
C)  neutral. 
D)  negative.

Question 20

Unemployment benefits are an example of a/an:

Accepted Answer

A)  discretionary stabiliser. 
B)  countercyclical stabiliser. 
C)  automatic stabiliser. 
D)  seasonal stabiliser. 
A)  discretionary stabiliser. 
B)  countercyclical stabiliser. 
C)  automatic stabiliser. 
D)  seasonal stabiliser.

Australian microeconomic reforms can be viewed as:

The following is important when interpreting the federal budget:

If the MPC is 0.6 and if the goal is to increase real GDP by $200 million, then by how much would government spending have to change to generate this increase in real GDP?

The RBA purchase of securities issued by the government is known as:

Which of the following is true?

Narrbegin Exhibit 17.1 Aggregate demand and supply model -Beginning at equilibrium E₁ in Exhibit 17.1, when the government increases spending or cuts taxes the economy will experience:

When a federal budget deficit causes crowding out:

Suppose inflation is a threat because the current aggregate demand curve will increase by $600 billion at any price level. If the marginal propensity to consume is 0.75, federal policymakers can follow Keynesian economics and restrain inflation by:

A country's national debt is:

It is inflationary for government to increase spending if:

If the government issues securities in order to finance current consumption, then:

Equal increases in government expenditures and taxes will:

If the national debt is owed _, then the burden of the debt will fall disproportionately on _.

Because of the automatic stabilisers, a decline in the level of economic activity will cause:

Unemployment benefits act as automatic stabilisers by:

Narrbegin Exhibit 17.2 Aggregate demand and supply model -Suppose the economy in Exhibit 17.2 is in equilibrium at point E₁ and the marginal propensity to consume (MPC) is 0.75. Following Keynesian economics, the federal government can move the economy to point E₂ and reduce inflation by:

The objectives of the GST in Australia were to:

If the treasurer announces a large, expected budget deficit for the forthcoming year, this is a sign that the government's fiscal stance will be:

Unemployment benefits are an example of a/an:

Thinking Like an Economist

Applying Graphs to Economics

Production Possibilities and Opportunity Cost

Market Demand and Supply

Markets in Action

Elasticity of Demand and Supply

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Policy Issues: Housing Affordability and Climate Change

Measuring the Size of the Economy

Business Cycles and Economic Growth

Inflation and Unemployment

A Simple Model of the Macro Economy

The Monetary and Financial System

Macroeconomic Policy I: Monetary Policy

International Trade and Finance

Filters

Exam 18: Macroeconomic Policy II: Fiscal Policy

Australian microeconomic reforms can be viewed as:

The following is important when interpreting the federal budget:

If the MPC is 0.6 and if the goal is to increase real GDP by $200 million, then by how much would government spending have to change to generate this increase in real GDP?

The RBA purchase of securities issued by the government is known as:

Which of the following is true?

Narrbegin Exhibit 17.1 Aggregate demand and supply model -Beginning at equilibrium E1 in Exhibit 17.1, when the government increases spending or cuts taxes the economy will experience:

When a federal budget deficit causes crowding out:

Suppose inflation is a threat because the current aggregate demand curve will increase by $600 billion at any price level. If the marginal propensity to consume is 0.75, federal policymakers can follow Keynesian economics and restrain inflation by:

A country's national debt is:

It is inflationary for government to increase spending if:

If the government issues securities in order to finance current consumption, then:

Equal increases in government expenditures and taxes will:

If the national debt is owed _____, then the burden of the debt will fall disproportionately on _____.

Because of the automatic stabilisers, a decline in the level of economic activity will cause:

Unemployment benefits act as automatic stabilisers by:

Narrbegin Exhibit 17.2 Aggregate demand and supply model -Suppose the economy in Exhibit 17.2 is in equilibrium at point E1 and the marginal propensity to consume (MPC) is 0.75. Following Keynesian economics, the federal government can move the economy to point E2 and reduce inflation by:

The objectives of the GST in Australia were to:

If the treasurer announces a large, expected budget deficit for the forthcoming year, this is a sign that the government's fiscal stance will be:

Unemployment benefits are an example of a/an:

Thinking Like an Economist

Applying Graphs to Economics

Production Possibilities and Opportunity Cost

Market Demand and Supply

Markets in Action

Elasticity of Demand and Supply

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Policy Issues: Housing Affordability and Climate Change

Measuring the Size of the Economy

Business Cycles and Economic Growth

Inflation and Unemployment

A Simple Model of the Macro Economy

The Monetary and Financial System

Macroeconomic Policy I: Monetary Policy

International Trade and Finance

Filters

Narrbegin Exhibit 17.1 Aggregate demand and supply model -Beginning at equilibrium E₁ in Exhibit 17.1, when the government increases spending or cuts taxes the economy will experience:

If the national debt is owed _, then the burden of the debt will fall disproportionately on _.

Narrbegin Exhibit 17.2 Aggregate demand and supply model -Suppose the economy in Exhibit 17.2 is in equilibrium at point E₁ and the marginal propensity to consume (MPC) is 0.75. Following Keynesian economics, the federal government can move the economy to point E₂ and reduce inflation by: