Question 1

If Ricardian equivalence holds,fiscal policy has no effect on either inflation or real growth.

Accepted Answer

A) True 
 B)False

Question 2

Fiscal policy involving _____ is designed to influence business cycle fluctuations.

Accepted Answer

A)  the taxation of income 
B)  government spending 
C)  government borrowing 
D)  taxation,government spending,and borrowing 
A)  the taxation of income 
B)  government spending 
C)  government borrowing 
D)  taxation,government spending,and borrowing

Question 3

Small changes in government spending can end up having larger changes on the overall growth rate of output.

Accepted Answer

A) True 
 B)False

Question 4

To fight a recession,the government can:

Accepted Answer

A)  increase spending. 
B)  increase taxes. 
C)  buy bonds. 
D)  increase interest rates. 
A)  increase spending. 
B)  increase taxes. 
C)  buy bonds. 
D)  increase interest rates.

Question 5

As a result of _____,a temporary tax rebate tends to create a small increase in spending over many years rather than a big increase in the present.

Accepted Answer

A)  crowding out 
B)  intertemporal substitution 
C)  consumption smoothing 
D)  the bandwagon effect 
A)  crowding out 
B)  intertemporal substitution 
C)  consumption smoothing 
D)  the bandwagon effect

Question 6

Other things equal,will an individual tax rebate or a cut in tax rates provide the largest stimulus?

Accepted Answer

A)  an individual tax rebate 
B)  a cut in tax rates 
C)  They will both produce the same amount of stimulus. 
D)  Neither will provide any stimulus. 
A)  an individual tax rebate 
B)  a cut in tax rates 
C)  They will both produce the same amount of stimulus. 
D)  Neither will provide any stimulus.

Question 7

Which is NOT a relevant lag that would delay the effect of fiscal policy?

Accepted Answer

A)  recognition lag 
B)  implementation lag 
C)  effectiveness lag 
D)  observation lag 
A)  recognition lag 
B)  implementation lag 
C)  effectiveness lag 
D)  observation lag

Question 8

Monetary policy lags are generally shorter than fiscal policy lags.

Accepted Answer

A) True 
 B)False

Question 9

When the government sells bonds to finance government expenditures,it actually encourages more household saving.

Accepted Answer

A) True 
 B)False

Question 10

Which is NOT a way to accelerate aggregate demand during an economic slowdown?

Accepted Answer

A)  temporary relief for unemployed borrowers 
B)  temporary investment tax credit 
C)  temporary reduction in the payroll tax 
D)  temporary reduction in the sales tax 
A)  temporary relief for unemployed borrowers 
B)  temporary investment tax credit 
C)  temporary reduction in the payroll tax 
D)  temporary reduction in the sales tax

If Ricardian equivalence holds,fiscal policy has no effect on either inflation or real growth.

Fiscal policy involving _____ is designed to influence business cycle fluctuations.

Small changes in government spending can end up having larger changes on the overall growth rate of output.

To fight a recession,the government can:

As a result of _____,a temporary tax rebate tends to create a small increase in spending over many years rather than a big increase in the present.

Other things equal,will an individual tax rebate or a cut in tax rates provide the largest stimulus?

Which is NOT a relevant lag that would delay the effect of fiscal policy?

Monetary policy lags are generally shorter than fiscal policy lags.

When the government sells bonds to finance government expenditures,it actually encourages more household saving.

Which is NOT a way to accelerate aggregate demand during an economic slowdown?

The Big Ideas

The Power of Trade

Supply and Demand

Equilibrium- How Supply and Demand

Price Ceilings and Floors

GDP and the Measurement of Progress

The Wealth of Nations and Economic Growth

Growth,capital Accumulation

Saving,investment,and the Financial System

Stock Markets and Personal Finance

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Business Fluctuations

Transmission and Amplification Mechanisms

The Federal Reserve System

Monetary Policy

The Federal Budget- Taxes and Spending

International Trade

International Finance

Political Economy and Public Choice

Filters

Exam 18: Fiscal Policy

If Ricardian equivalence holds,fiscal policy has no effect on either inflation or real growth.

Fiscal policy involving _____ is designed to influence business cycle fluctuations.

Small changes in government spending can end up having larger changes on the overall growth rate of output.

To fight a recession,the government can:

As a result of _____,a temporary tax rebate tends to create a small increase in spending over many years rather than a big increase in the present.

Other things equal,will an individual tax rebate or a cut in tax rates provide the largest stimulus?

Which is NOT a relevant lag that would delay the effect of fiscal policy?

Monetary policy lags are generally shorter than fiscal policy lags.

When the government sells bonds to finance government expenditures,it actually encourages more household saving.

Which is NOT a way to accelerate aggregate demand during an economic slowdown?

The Big Ideas

The Power of Trade

Supply and Demand

Equilibrium- How Supply and Demand

Price Ceilings and Floors

GDP and the Measurement of Progress

The Wealth of Nations and Economic Growth

Growth,capital Accumulation

Saving,investment,and the Financial System

Stock Markets and Personal Finance

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Business Fluctuations

Transmission and Amplification Mechanisms

The Federal Reserve System

Monetary Policy

The Federal Budget- Taxes and Spending

International Trade

International Finance

Political Economy and Public Choice

Filters