Question 1

-Using the data in the above table,if potential GDP for this economy is $25 billion,then at the present moment real GDP is

Accepted Answer

A) less than potential GDP. 
B) equal to potential GDP. 
C) greater than potential GDP. 
D) at the full-employment level of output. 
E) not comparable to potential GDP. 
A) less than potential GDP. 
B) equal to potential GDP. 
C) greater than potential GDP. 
D) at the full-employment level of output. 
E) not comparable to potential GDP.

Question 2

If a change in the tax laws leads to a $100 billion decrease in tax revenue,then aggregate demand

Accepted Answer

A) increases by $100 billion. 
B) increases by less than $100 billion. 
C) increases by more than $100 billion. 
D) decreases by $100 billion. 
E) decreases by more than $100 billion. 
A) increases by $100 billion. 
B) increases by less than $100 billion. 
C) increases by more than $100 billion. 
D) decreases by $100 billion. 
E) decreases by more than $100 billion.

Question 3

The figure above shows a nation's aggregate demand curve,aggregate supply curve,and potential GDP.
-In the figure above,the ________ gap is equal to ________.

Accepted Answer

A) recessionary;$1 trillion 
B) inflationary;$1 trillion 
C) recessionary;$12 trillion 
D) inflationary;$12 trillion 
E) recessionary;$13 trillion 
A) recessionary;$1 trillion 
B) inflationary;$1 trillion 
C) recessionary;$12 trillion 
D) inflationary;$12 trillion 
E) recessionary;$13 trillion

Question 4

If tax revenue is $230 billion and the government's outlays are $235 billion,then the budget

Accepted Answer

A) deficit is $5 billion,and government debt will remain the same. 
B) surplus is $5 billion,and government debt will increase by $5 billion. 
C) deficit is $5 billion,and government debt will increase by $5 billion. 
D) deficit is $5 billion,and government debt will decrease by $5 billion. 
E) surplus is $230 billion,and the budget deficit is $235 billion. 
A) deficit is $5 billion,and government debt will remain the same. 
B) surplus is $5 billion,and government debt will increase by $5 billion. 
C) deficit is $5 billion,and government debt will increase by $5 billion. 
D) deficit is $5 billion,and government debt will decrease by $5 billion. 
E) surplus is $230 billion,and the budget deficit is $235 billion.

Question 5

During the Great Depression,real GDP decreased,unemployment soared,and the inflation rate was negative.Which would have been the appropriate federal government policy combination to improve economic performance?

Accepted Answer

A) increase government expenditure,decrease taxes,increase the quantity of money 
B) increase government expenditure,decrease taxes,decrease the quantity of money 
C) decrease government expenditure,increase taxes,decrease the quantity of money 
D) do not change government expenditures or taxes ,increase the quantity of money 
E) decrease government expenditures,increase taxes,do not change the quantity of money 
A) increase government expenditure,decrease taxes,increase the quantity of money 
B) increase government expenditure,decrease taxes,decrease the quantity of money 
C) decrease government expenditure,increase taxes,decrease the quantity of money 
D) do not change government expenditures or taxes ,increase the quantity of money 
E) decrease government expenditures,increase taxes,do not change the quantity of money

Question 6

If the Fed raises the federal funds rate,which of the following happens?

Accepted Answer

A) Net exports increase. 
B) The real interest rate falls. 
C) Aggregate demand decreases. 
D) Real GDP increases. 
E) The price level rises. 
A) Net exports increase. 
B) The real interest rate falls. 
C) Aggregate demand decreases. 
D) Real GDP increases. 
E) The price level rises.

Question 7

The Fed raises the federal funds rate.Which of the following changes occurs most rapidly?

Accepted Answer

A) Exchange rate rises. 
B) Consumption expenditure decreases. 
C) Aggregate demand decreases. 
D) Real GDP growth decreases. 
E) Inflation rate decreases. 
A) Exchange rate rises. 
B) Consumption expenditure decreases. 
C) Aggregate demand decreases. 
D) Real GDP growth decreases. 
E) Inflation rate decreases.

Question 8

The table above gives a nation's government outlays and tax revenue for 2008 through 2012.
-During which years did the country have a budget surplus?

Accepted Answer

A) 2008 and 2009 
B) 2012 only 
C) 2011 only 
D) 2010 and 2012 
E) all except 2011 
A) 2008 and 2009 
B) 2012 only 
C) 2011 only 
D) 2010 and 2012 
E) all except 2011

Question 9

Explain how a tax cut effects employment,labor productivity,and potential GDP.

Accepted Answer

A tax cut increases the incentive to wor

Question 10

A tax hike ________ aggregate demand and ________ aggregate supply.

Accepted Answer

A) increases;increases 
B) increases;decreases 
C) decreases;increases 
D) decreases;decreases 
E) does not change;increases 
A) increases;increases 
B) increases;decreases 
C) decreases;increases 
D) decreases;decreases 
E) does not change;increases

Question 11

How does a rise in the federal funds rate affect aggregate demand,real GDP,and the price level?

Accepted Answer

A rise in the federal funds leads to inv

Question 12

If the Fed sells government securities,other interest rates ________ and then exchange rate ________.

Accepted Answer

A) rise;does not change 
B) fall;falls 
C) do not change;rises 
D) rise;falls 
E) rise;rises 
A) rise;does not change 
B) fall;falls 
C) do not change;rises 
D) rise;falls 
E) rise;rises

Question 13

If the Fed lowers the federal funds rate,which of the following will NOT happen?

Accepted Answer

A) The real interest rate falls. 
B) Other short-term interest rates fall. 
C) Aggregate demand increases. 
D) Real GDP increases. 
E) The price level falls. 
A) The real interest rate falls. 
B) Other short-term interest rates fall. 
C) Aggregate demand increases. 
D) Real GDP increases. 
E) The price level falls.

Question 14

A country reports that its government outlays total $0.8 trillion and its tax revenues total $0.6 trillion.Does the country have a budget surplus or deficit and what is the surplus or deficit?

Accepted Answer

The country has a bu

Question 15

The Fed raises the interest rate when it

Accepted Answer

A) fears recession. 
B) wants to increase the quantity of money. 
C) fears inflation. 
D) wants to encourage bank lending. 
E) cannot change the quantity of money. 
A) fears recession. 
B) wants to increase the quantity of money. 
C) fears inflation. 
D) wants to encourage bank lending. 
E) cannot change the quantity of money.

Question 16

Assume the federal government raises taxes (a contractionary fiscal policy).If the tax increase affects AS and AD equally,then real GDP will ________ and the price level will ________.

Accepted Answer

A) decrease;decrease 
B) increase;be unchanged 
C) increase;increase 
D) decrease;be unchanged 
E) increase;decrease 
A) decrease;decrease 
B) increase;be unchanged 
C) increase;increase 
D) decrease;be unchanged 
E) increase;decrease

Question 17

When tax revenue ________ outlays is positive,then the government has a budget ________.

Accepted Answer

A) minus;surplus 
B) divided by;surplus 
C) minus;deficit 
D) plus;deficit 
E) plus;surplus 
A) minus;surplus 
B) divided by;surplus 
C) minus;deficit 
D) plus;deficit 
E) plus;surplus

Question 18

When comparing a $100 billion increase in government expenditure to a $100 billion decrease in tax revenue,the effect of the increase in government expenditure on aggregate demand is

Accepted Answer

A) greater than the effect of the tax decrease. 
B) equal to the effect of the tax decrease. 
C) less than the effect of the tax decrease. 
D) positive whereas the effect of the tax decrease is negative. 
E) negative whereas the effect of the tax decrease is positive. 
A) greater than the effect of the tax decrease. 
B) equal to the effect of the tax decrease. 
C) less than the effect of the tax decrease. 
D) positive whereas the effect of the tax decrease is negative. 
E) negative whereas the effect of the tax decrease is positive.

Question 19

Monetary policy decisions are made by the

Accepted Answer

A) Federal Reserve Economic Committee. 
B) Federal Open Market Committee. 
C) Council of Economic Advisors. 
D) Congress of the United States. 
E) U.S.Mint. 
A) Federal Reserve Economic Committee. 
B) Federal Open Market Committee. 
C) Council of Economic Advisors. 
D) Congress of the United States. 
E) U.S.Mint.

Question 20

The government collects tax revenue of $100 million and has $105 million in outlays.The budget balance is a

Accepted Answer

A) surplus of $5 million. 
B) deficit of $5 million. 
C) surplus of $105 million. 
D) deficit of $105 million. 
E) surplus of $100 million and a deficit of $105 million. 
A) surplus of $5 million. 
B) deficit of $5 million. 
C) surplus of $105 million. 
D) deficit of $105 million. 
E) surplus of $100 million and a deficit of $105 million.

-Using the data in the above table,if potential GDP for this economy is $25 billion,then at the present moment real GDP is

If a change in the tax laws leads to a $100 billion decrease in tax revenue,then aggregate demand

The figure above shows a nation's aggregate demand curve,aggregate supply curve,and potential GDP. -In the figure above,the gap is equal to .

If tax revenue is $230 billion and the government's outlays are $235 billion,then the budget

During the Great Depression,real GDP decreased,unemployment soared,and the inflation rate was negative.Which would have been the appropriate federal government policy combination to improve economic performance?

If the Fed raises the federal funds rate,which of the following happens?

The Fed raises the federal funds rate.Which of the following changes occurs most rapidly?

The table above gives a nation's government outlays and tax revenue for 2008 through 2012. -During which years did the country have a budget surplus?

Explain how a tax cut effects employment,labor productivity,and potential GDP.

A tax hike aggregate demand and aggregate supply.

How does a rise in the federal funds rate affect aggregate demand,real GDP,and the price level?

If the Fed sells government securities,other interest rates and then exchange rate .

If the Fed lowers the federal funds rate,which of the following will NOT happen?

A country reports that its government outlays total $0.8 trillion and its tax revenues total $0.6 trillion.Does the country have a budget surplus or deficit and what is the surplus or deficit?

The Fed raises the interest rate when it

Assume the federal government raises taxes (a contractionary fiscal policy).If the tax increase affects AS and AD equally,then real GDP will and the price level will .

When tax revenue outlays is positive,then the government has a budget .

When comparing a $100 billion increase in government expenditure to a $100 billion decrease in tax revenue,the effect of the increase in government expenditure on aggregate demand is

Monetary policy decisions are made by the

The government collects tax revenue of $100 million and has $105 million in outlays.The budget balance is a

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Filters

Exam 20: Fiscal Policy and Monetary Policy

-Using the data in the above table,if potential GDP for this economy is $25 billion,then at the present moment real GDP is

If a change in the tax laws leads to a $100 billion decrease in tax revenue,then aggregate demand

The figure above shows a nation's aggregate demand curve,aggregate supply curve,and potential GDP. -In the figure above,the ________ gap is equal to ________.

If tax revenue is $230 billion and the government's outlays are $235 billion,then the budget

During the Great Depression,real GDP decreased,unemployment soared,and the inflation rate was negative.Which would have been the appropriate federal government policy combination to improve economic performance?

If the Fed raises the federal funds rate,which of the following happens?

The Fed raises the federal funds rate.Which of the following changes occurs most rapidly?

The table above gives a nation's government outlays and tax revenue for 2008 through 2012. -During which years did the country have a budget surplus?

Explain how a tax cut effects employment,labor productivity,and potential GDP.

A tax hike ________ aggregate demand and ________ aggregate supply.

How does a rise in the federal funds rate affect aggregate demand,real GDP,and the price level?

If the Fed sells government securities,other interest rates ________ and then exchange rate ________.

If the Fed lowers the federal funds rate,which of the following will NOT happen?

A country reports that its government outlays total $0.8 trillion and its tax revenues total $0.6 trillion.Does the country have a budget surplus or deficit and what is the surplus or deficit?

The Fed raises the interest rate when it

Assume the federal government raises taxes (a contractionary fiscal policy).If the tax increase affects AS and AD equally,then real GDP will ________ and the price level will ________.

When tax revenue ________ outlays is positive,then the government has a budget ________.

When comparing a $100 billion increase in government expenditure to a $100 billion decrease in tax revenue,the effect of the increase in government expenditure on aggregate demand is

Monetary policy decisions are made by the

The government collects tax revenue of $100 million and has $105 million in outlays.The budget balance is a

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Filters

The figure above shows a nation's aggregate demand curve,aggregate supply curve,and potential GDP. -In the figure above,the gap is equal to .

A tax hike aggregate demand and aggregate supply.

If the Fed sells government securities,other interest rates and then exchange rate .

Assume the federal government raises taxes (a contractionary fiscal policy).If the tax increase affects AS and AD equally,then real GDP will and the price level will .

When tax revenue outlays is positive,then the government has a budget .