Question 1

Money financing is financing a deficit by selling securities:

Accepted Answer

A)  to the public. 
B)  to the central bank. 
C)  overseas. 
D)  to the banks and to the public. 
A)  to the public. 
B)  to the central bank. 
C)  overseas. 
D)  to the banks and to the public.

Question 2

A recent fiscal policy initiative in Australia is:

Accepted Answer

A)  a short-term competition policy. 
B)  a broadband initiative. 
C)  a new competition policy. 
D)  limited employment subsidies provided to employers to encourage the hiring of the long-term unemployed. 
A)  a short-term competition policy. 
B)  a broadband initiative. 
C)  a new competition policy. 
D)  limited employment subsidies provided to employers to encourage the hiring of the long-term unemployed.

Question 3

'Tax cuts - by providing incentives to work, save and invest - will raise employment and lower the price level.' This argument is made by the:

Accepted Answer

A)  Keynesian economists. 
B)  supply-side economists. 
C)  classical economists. 
D)  monetarists. 
A)  Keynesian economists. 
B)  supply-side economists. 
C)  classical economists. 
D)  monetarists.

Question 4

Narrbegin Exhibit 17.3   
-According to Exhibit 17.3, if we assume the MPC is 0.8, then a shift in the AD curve from AD0 to AD1 would require an increase in government spending of:

Accepted Answer

A)  $5 billion. 
B)  $10 billion. 
C)  $50 billion. 
D)  greater than $50 billion to allow for inflation. 
A)  $5 billion. 
B)  $10 billion. 
C)  $50 billion. 
D)  greater than $50 billion to allow for inflation.

Question 5

The supply-side fiscal policy:

Accepted Answer

A)  accelerates consumers' confidence in obtaining more goods at lower prices. 
B)  promotes taxes on producers but not consumers. 
C)  aims to achieve higher aggregate supply to increase real output, full employment and lower prices. 
D)  aims to achieve low aggregate supply to stabilise real output, full employment and lower prices. 
A)  accelerates consumers' confidence in obtaining more goods at lower prices. 
B)  promotes taxes on producers but not consumers. 
C)  aims to achieve higher aggregate supply to increase real output, full employment and lower prices. 
D)  aims to achieve low aggregate supply to stabilise real output, full employment and lower prices.

Question 6

During the Reagan administration, the Laffer curve was used to argue that:

Accepted Answer

A)  the supply-side effects of tax cuts are relatively small. 
B)  discretionary tax cuts are unwise because they create stagflation. 
C)  lower income tax rates could increase tax revenues. 
D)  a 'flat tax' would simplify the tax code and stimulate economic growth. 
A)  the supply-side effects of tax cuts are relatively small. 
B)  discretionary tax cuts are unwise because they create stagflation. 
C)  lower income tax rates could increase tax revenues. 
D)  a 'flat tax' would simplify the tax code and stimulate economic growth.

Question 7

The current stated fiscal policy of both major Australian political parties is to:

Accepted Answer

A)  run deficits when economic growth is high. 
B)  run surpluses when economic growth is low. 
C)  have a balanced budget over each fiscal year. 
D)  have a balanced budget over the course of the business cycle. 
A)  run deficits when economic growth is high. 
B)  run surpluses when economic growth is low. 
C)  have a balanced budget over each fiscal year. 
D)  have a balanced budget over the course of the business cycle.

Question 8

If the government projects that negative economic growth will occur over the next few months, the most likely outcome for the federal budget will be:

Accepted Answer

A)  a surplus. 
B)  a balanced budget. 
C)  a deficit. 
D)  contractionary. 
A)  a surplus. 
B)  a balanced budget. 
C)  a deficit. 
D)  contractionary.

Question 9

Which of the following groups believes that the economy can achieve full employment without inflation through tax reductions, lower resource prices and deregulation?

Accepted Answer

A)  The supply-side school. 
B)  The Keynesian school. 
C)  The neo-Keynesian school. 
D)  The rational expectations school. 
A)  The supply-side school. 
B)  The Keynesian school. 
C)  The neo-Keynesian school. 
D)  The rational expectations school.

Question 10

Which of the following is not true?

Accepted Answer

A)  If the government has a budget deficit, the national debt is increased. 
B)  National debt is a marginal value of outstanding Commonwealth Government securities. 
C)  National debt represents the extent of previous borrowing by the federal government. 
D)  A portion of national debt is held by the central bank. 
A)  If the government has a budget deficit, the national debt is increased. 
B)  National debt is a marginal value of outstanding Commonwealth Government securities. 
C)  National debt represents the extent of previous borrowing by the federal government. 
D)  A portion of national debt is held by the central bank.

Question 11

The tax multiplier is greater than the spending multiplier regardless of the value of the marginal propensity to save (MPS).

Accepted Answer

A) True 
 B)False

Question 12

Assume the marginal propensity to consume (MPC) is 0.75 and the government increases taxes by $250 billion. The aggregate demand curve will shift to the:

Accepted Answer

A)  left by $1000 billion. 
B)  right by $1000 billion. 
C)  left by $750 billion. 
D)  right by $750 billion. 
A)  left by $1000 billion. 
B)  right by $1000 billion. 
C)  left by $750 billion. 
D)  right by $750 billion.

Question 13

Along with lower tax rates, supply-siders' policy recommendations include:

Accepted Answer

A)  spending cuts and increased government regulation. 
B)  lower resource prices and decreased government regulation. 
C)  spending increases and decreased government regulation. 
D)  spending increases and increased government regulation. 
A)  spending cuts and increased government regulation. 
B)  lower resource prices and decreased government regulation. 
C)  spending increases and decreased government regulation. 
D)  spending increases and increased government regulation.

Question 14

According to supply-side economists, lowering corporate income taxes:

Accepted Answer

A)  results in wage hikes for employees but no economic growth. 
B)  moves society toward greater income equality. 
C)  checks the expansion of real GDP and employment. 
D)  stimulates investment and economic growth. 
A)  results in wage hikes for employees but no economic growth. 
B)  moves society toward greater income equality. 
C)  checks the expansion of real GDP and employment. 
D)  stimulates investment and economic growth.

Question 15

The 'crowding out' of private investment is associated with:

Accepted Answer

A)  a reduction in profitable investment opportunities due to a recession. 
B)  increased competition from foreign investors in Australian markets. 
C)  higher interest rates resulting from a declining rate of saving. 
D)  higher interest rates resulting from increased borrowing by the federal government. 
A)  a reduction in profitable investment opportunities due to a recession. 
B)  increased competition from foreign investors in Australian markets. 
C)  higher interest rates resulting from a declining rate of saving. 
D)  higher interest rates resulting from increased borrowing by the federal government.

Question 16

Supply-side economic policies are designed to shift the aggregate supply curve to the right, whereas Keynesian economic policies focus on shifting the aggregate demand curve to the right during recessions and to the left during economic expansions.

Accepted Answer

A) True 
 B)False

Question 17

If the government is currently running an overall budget deficit, when inflation is rising and unemployment is low, then the cyclically adjusted budget deficit should indicate:

Accepted Answer

A)  a contractionary fiscal stance. 
B)  an expansionary fiscal stance. 
C)  a neutral stance. 
D)  a lower domestic deficit. 
A)  a contractionary fiscal stance. 
B)  an expansionary fiscal stance. 
C)  a neutral stance. 
D)  a lower domestic deficit.

Question 18

The result of the balanced-budget multiplier is that aggregate demand changes by the amount of the change in:

Accepted Answer

A)  government spending. 
B)  tax revenue. 
C)  government spending plus tax revenue. 
D)  government spending minus tax revenue. 
A)  government spending. 
B)  tax revenue. 
C)  government spending plus tax revenue. 
D)  government spending minus tax revenue.

Question 19

Automatic stabilisers tend to stabilise the level of real GDP because:

Accepted Answer

A)  parliament quickly changes spending and tax revenue. 
B)  federal expenditures and tax revenues change as the level of real GDP changes. 
C)  the spending and tax multiplier are constant. 
D)  wages are controlled by the minimum wage law. 
A)  parliament quickly changes spending and tax revenue. 
B)  federal expenditures and tax revenues change as the level of real GDP changes. 
C)  the spending and tax multiplier are constant. 
D)  wages are controlled by the minimum wage law.

Question 20

The domestic deficit is the:

Accepted Answer

A)  sum of domestically derived revenue and domestic government expenditure. 
B)  sum of domestically derived revenue and total government expenditure. 
C)  difference between domestically derived revenue and total government expenditure. 
D)  difference between domestically derived revenue and domestic government expenditure. 
A)  sum of domestically derived revenue and domestic government expenditure. 
B)  sum of domestically derived revenue and total government expenditure. 
C)  difference between domestically derived revenue and total government expenditure. 
D)  difference between domestically derived revenue and domestic government expenditure.

Money financing is financing a deficit by selling securities:

A recent fiscal policy initiative in Australia is:

'Tax cuts - by providing incentives to work, save and invest - will raise employment and lower the price level.' This argument is made by the:

Narrbegin Exhibit 17.3 -According to Exhibit 17.3, if we assume the MPC is 0.8, then a shift in the AD curve from AD0 to AD1 would require an increase in government spending of:

The supply-side fiscal policy:

During the Reagan administration, the Laffer curve was used to argue that:

The current stated fiscal policy of both major Australian political parties is to:

If the government projects that negative economic growth will occur over the next few months, the most likely outcome for the federal budget will be:

Which of the following groups believes that the economy can achieve full employment without inflation through tax reductions, lower resource prices and deregulation?

Which of the following is not true?

The tax multiplier is greater than the spending multiplier regardless of the value of the marginal propensity to save (MPS).

Assume the marginal propensity to consume (MPC) is 0.75 and the government increases taxes by $250 billion. The aggregate demand curve will shift to the:

Along with lower tax rates, supply-siders' policy recommendations include:

According to supply-side economists, lowering corporate income taxes:

The 'crowding out' of private investment is associated with:

Supply-side economic policies are designed to shift the aggregate supply curve to the right, whereas Keynesian economic policies focus on shifting the aggregate demand curve to the right during recessions and to the left during economic expansions.

If the government is currently running an overall budget deficit, when inflation is rising and unemployment is low, then the cyclically adjusted budget deficit should indicate:

The result of the balanced-budget multiplier is that aggregate demand changes by the amount of the change in:

Automatic stabilisers tend to stabilise the level of real GDP because:

The domestic deficit is the:

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

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Exam 18: Macroeconomic Policy II: Fiscal Policy

Money financing is financing a deficit by selling securities:

A recent fiscal policy initiative in Australia is:

'Tax cuts - by providing incentives to work, save and invest - will raise employment and lower the price level.' This argument is made by the:

Narrbegin Exhibit 17.3 -According to Exhibit 17.3, if we assume the MPC is 0.8, then a shift in the AD curve from AD0 to AD1 would require an increase in government spending of:

The supply-side fiscal policy:

During the Reagan administration, the Laffer curve was used to argue that:

The current stated fiscal policy of both major Australian political parties is to:

If the government projects that negative economic growth will occur over the next few months, the most likely outcome for the federal budget will be:

Which of the following groups believes that the economy can achieve full employment without inflation through tax reductions, lower resource prices and deregulation?

Which of the following is not true?

The tax multiplier is greater than the spending multiplier regardless of the value of the marginal propensity to save (MPS).

Assume the marginal propensity to consume (MPC) is 0.75 and the government increases taxes by $250 billion. The aggregate demand curve will shift to the:

Along with lower tax rates, supply-siders' policy recommendations include:

According to supply-side economists, lowering corporate income taxes:

The 'crowding out' of private investment is associated with:

Supply-side economic policies are designed to shift the aggregate supply curve to the right, whereas Keynesian economic policies focus on shifting the aggregate demand curve to the right during recessions and to the left during economic expansions.

If the government is currently running an overall budget deficit, when inflation is rising and unemployment is low, then the cyclically adjusted budget deficit should indicate:

The result of the balanced-budget multiplier is that aggregate demand changes by the amount of the change in:

Automatic stabilisers tend to stabilise the level of real GDP because:

The domestic deficit is the:

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