Question 1

The natural rate of unemployment is

Accepted Answer

A) seasonal unemployment only 
B) 3 percent 
C) the unemployment rate when none of the work force is unemployed longer than six weeks 
D) the unemployment rate at which the economy is producing its potential GDP 
E) defined by the government 
A) seasonal unemployment only 
B) 3 percent 
C) the unemployment rate when none of the work force is unemployed longer than six weeks 
D) the unemployment rate at which the economy is producing its potential GDP 
E) defined by the government

Question 2

Fiscal policy

Accepted Answer

A) uses the federal government's powers of spending and taxation to affect employment,the price level,and GDP 
B) uses the federal government's powers over the money supply and interest rates to affect employment,the price level,and GDP 
C) can affect employment and prices,but not the level of GDP 
D) can affect employment and the level of GDP,but not the price level 
E) is most effective when employed by state governments rather than by the federal government 
A) uses the federal government's powers of spending and taxation to affect employment,the price level,and GDP 
B) uses the federal government's powers over the money supply and interest rates to affect employment,the price level,and GDP 
C) can affect employment and prices,but not the level of GDP 
D) can affect employment and the level of GDP,but not the price level 
E) is most effective when employed by state governments rather than by the federal government

Question 3

The unemployment problem becomes more severe if prices are sticky downward.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following might be considered the most contractionary set of fiscal policies?

Accepted Answer

A) increase in government purchases,increase in taxes,and decrease in transfer payments 
B) decrease in government purchases,increase in taxes,and decrease in transfer payments 
C) increase in government purchases,decrease in taxes,and increase in transfer payments 
D) increase in government purchases,increase in taxes,and increase in transfer payments 
E) decrease in government purchases,decrease in taxes,and decrease in transfer payments 
A) increase in government purchases,increase in taxes,and decrease in transfer payments 
B) decrease in government purchases,increase in taxes,and decrease in transfer payments 
C) increase in government purchases,decrease in taxes,and increase in transfer payments 
D) increase in government purchases,increase in taxes,and increase in transfer payments 
E) decrease in government purchases,decrease in taxes,and decrease in transfer payments

Question 5

An increase in government purchases must always be accompanied by an increase in autonomous net taxes.

Accepted Answer

A) True 
 B)False

Question 6

Discretionary fiscal policy works by shifting the aggregate demand curve.

Accepted Answer

A) True 
 B)False

Question 7

Suppose the government reduces its budget deficit at the same time that energy prices rise sharply.Which of the following will happen?

Accepted Answer

A) The price level will rise,since higher energy prices increase the cost of production. 
B) real GDP will fall,since both events will tend to cause an economic contraction. 
C) The price level will fall,because the aggregate demand curve has shifted leftward. 
D) real GDP will rise; with less government spending,there are more opportunities for the private sector. 
E) Both the price level and real GDP will fall. 
A) The price level will rise,since higher energy prices increase the cost of production. 
B) real GDP will fall,since both events will tend to cause an economic contraction. 
C) The price level will fall,because the aggregate demand curve has shifted leftward. 
D) real GDP will rise; with less government spending,there are more opportunities for the private sector. 
E) Both the price level and real GDP will fall.

Question 8

One of the difficulties in using discretionary fiscal policy effectively is that the legislative decision making process is sometimes very long and drawn out.

Accepted Answer

A) True 
 B)False

Question 9

__________ unemployment benefits __________ the opportunity cost of not working,so some job seekers may decide to __________ their job searches.

Accepted Answer

A) Higher,reduce,increase 
B) Lower,reduce,decrease 
C) Higher,raise,decrease 
D) Lower,reduce,increase 
E) Higher,reduce,decrease 
A) Higher,reduce,increase 
B) Lower,reduce,decrease 
C) Higher,raise,decrease 
D) Lower,reduce,increase 
E) Higher,reduce,decrease

The natural rate of unemployment is

Fiscal policy

The unemployment problem becomes more severe if prices are sticky downward.

Which of the following might be considered the most contractionary set of fiscal policies?

An increase in government purchases must always be accompanied by an increase in autonomous net taxes.

Discretionary fiscal policy works by shifting the aggregate demand curve.

Suppose the government reduces its budget deficit at the same time that energy prices rise sharply.Which of the following will happen?

One of the difficulties in using discretionary fiscal policy effectively is that the legislative decision making process is sometimes very long and drawn out.

unemployment benefits the opportunity cost of not working,so some job seekers may decide to __ their job searches.

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Economic Decision Makers

Demand, supply, and Markets

Introduction to Macroeconomics

Tracking the Useconomy

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Aggregate Demand

Baggregate Expenditure and Aggregate Demand

Aggregate Supply

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

International Trade

Externalities and the Environment

International Finance

Economic Development

understanding Graphs

National Income Accounts

The Algebra of Demand-Side Equilibrium

Filters

Exam 12: Fiscal Policy

The natural rate of unemployment is

Fiscal policy

The unemployment problem becomes more severe if prices are sticky downward.

Which of the following might be considered the most contractionary set of fiscal policies?

An increase in government purchases must always be accompanied by an increase in autonomous net taxes.

Discretionary fiscal policy works by shifting the aggregate demand curve.

Suppose the government reduces its budget deficit at the same time that energy prices rise sharply.Which of the following will happen?

One of the difficulties in using discretionary fiscal policy effectively is that the legislative decision making process is sometimes very long and drawn out.

__________ unemployment benefits __________ the opportunity cost of not working,so some job seekers may decide to __________ their job searches.

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Economic Decision Makers

Demand, supply, and Markets

Introduction to Macroeconomics

Tracking the Useconomy

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Aggregate Demand

Baggregate Expenditure and Aggregate Demand

Aggregate Supply

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

International Trade

Externalities and the Environment

International Finance

Economic Development

understanding Graphs

National Income Accounts

The Algebra of Demand-Side Equilibrium

Filters

unemployment benefits the opportunity cost of not working,so some job seekers may decide to __ their job searches.