Question 1

The average tax rate increased during the 1993-2000 Clinton administrations.

Accepted Answer

A) True 
 B)False

Question 2

Refer to the information provided in Table 9.5 below to answer the questions that follow.
Table 9.5
All Numbers are in $ Million  
-Refer to Table 9.5. Suppose the economy is in equilibrium and the government increases spending by $50 million, the new equilibrium output is $________ million

Accepted Answer

A)  1,350 
B)  1,450 
C)  1,650 
D)  1,750 
A)  1,350 
B)  1,450 
C)  1,650 
D)  1,750

Question 3

Refer to the information provided in Figure 9.4 below to answer the questions that follow.   Figure 9.4
-Refer to Figure 9.4. What is the value of Point B?

Accepted Answer

A)  $7,000 billion 
B)  $6,000 billion 
C)  $3,500 billion 
D)  cannot be determined from the given information 
A)  $7,000 billion 
B)  $6,000 billion 
C)  $3,500 billion 
D)  cannot be determined from the given information

Question 4

The value of the balanced-budget multiplier is

Accepted Answer

A)  0. 
B)  greater than 0 but less than 1. 
C)  greater than 1. 
D)  1. 
A)  0. 
B)  greater than 0 but less than 1. 
C)  greater than 1. 
D)  1.

Question 5

A government's debt is increased when it

Accepted Answer

A)  balances is budget. 
B)  buys more bonds. 
C)  runs a deficit. 
D)  runs a surplus. 
A)  balances is budget. 
B)  buys more bonds. 
C)  runs a deficit. 
D)  runs a surplus.

Question 6

You are hired by the Bureau of Economic Analogies (BEA) as an economic consultant. The chairperson of the BEA tells you that he believes the current unemployment rate is too high. The unemployment rate can be reduced if aggregate output increases. He wants to know what policy to pursue to increase aggregate output by $500 billion. The best estimate he has for the MPC is 0.7. Which of the following policies should you recommend?

Accepted Answer

A)  Decrease government spending by $75 billion. 
B)  Reduce taxes by $214.3 billion. 
C)  Reduce taxes by $314.3 billion and to decrease government spending by $500 billion. 
D)  Reduce the budget deficit by $300 billion. 
A)  Decrease government spending by $75 billion. 
B)  Reduce taxes by $214.3 billion. 
C)  Reduce taxes by $314.3 billion and to decrease government spending by $500 billion. 
D)  Reduce the budget deficit by $300 billion.

Question 7

The Norwegian economy can be characterized by Equation 9.3.
EQUATION 9.3:
C = 100 + 0.8Yd
G = 500
T = 200
I = 200
-Refer to Equation 9.3. At the equilibrium level of output in Norway, leakages equal

Accepted Answer

A)  880. 
B)  830. 
C)  750. 
D)  700. 
A)  880. 
B)  830. 
C)  750. 
D)  700.

Question 8

When a government runs a deficit

Accepted Answer

A)  its debt increases. 
B)  it must raise taxes. 
C)  its debt decreases. 
D)  it must cut spending. 
A)  its debt increases. 
B)  it must raise taxes. 
C)  its debt decreases. 
D)  it must cut spending.

Question 9

Refer to the information provided in Table 9.8 below to answer the questions that follow.
Table 9.8
All Figures in Billions of Dollars
  
-Refer to Table 9.8. If taxes are reduced by $50 billion and government spending is reduced by $50 billion, the new equilibrium level of income

Accepted Answer

A)  is $3,550 billion. 
B)  is $3,350 billion. 
C)  is $1,600 billion. 
D)  cannot be determined from this information. 
A)  is $3,550 billion. 
B)  is $3,350 billion. 
C)  is $1,600 billion. 
D)  cannot be determined from this information.

Question 10

Refer to the information provided in Figure 9.1 below to answer the questions that follow.   Figure 9.1
-Refer to Figure 9.1. Injections = leakages

Accepted Answer

A)  when income = zero. 
B)  when consumption = saving. 
C)  at equilibrium. 
D)  when output = investment. 
A)  when income = zero. 
B)  when consumption = saving. 
C)  at equilibrium. 
D)  when output = investment.

Question 11

A tax cut of $12 billion will have less effect on the economy than an increase in government purchases of $12 billion.

Accepted Answer

A) True 
 B)False

Question 12

If the government runs a deficit, then the government debt increases.

Accepted Answer

A) True 
 B)False

Question 13

The aggregate consumption function is C = 100 + 0.6Yd. If income is $1,000 and net taxes are $300, consumption equals

Accepted Answer

A)  800. 
B)  700. 
C)  580. 
D)  520. 
A)  800. 
B)  700. 
C)  580. 
D)  520.

Question 14

If planned injections exceed leakages, output will

Accepted Answer

A)  decrease. 
B)  increase. 
C)  remain constant. 
D)  either increase or decrease. 
A)  decrease. 
B)  increase. 
C)  remain constant. 
D)  either increase or decrease.

Question 15

Assume that in Agraria the actual deficit is $625 billion. If Agraria was at full employment, the deficit would be $325 billion. The structural deficit in Agraria is

Accepted Answer

A)  $300 billion. 
B)  $325 billion. 
C)  $625 billion. 
D)  $950 billion. 
A)  $300 billion. 
B)  $325 billion. 
C)  $625 billion. 
D)  $950 billion.

Question 16

After government is added to the income-expenditure model, the formula for the aggregate consumption function is

Accepted Answer

A)  C = a - b(Y - T). 
B)  C = a - b(T - Y). 
C)  C = a + b(Y + T). 
D)  C = a + b(Y - T). 
A)  C = a - b(Y - T). 
B)  C = a - b(T - Y). 
C)  C = a + b(Y + T). 
D)  C = a + b(Y - T).

Question 17

The Canadian economy can be characterized by Equation 9.2.
EQUATION 9.2:
C = 500 + 0.5Yd
Taxes = 600
Equilibrium Output = $4,000
-Refer to Equation 9.2. At equilibrium leakages in Canada equal

Accepted Answer

A)  $1,700. 
B)  $1,750. 
C)  $1,800. 
D)  $2,100. 
A)  $1,700. 
B)  $1,750. 
C)  $1,800. 
D)  $2,100.

Question 18

Taxes are reduced by $70 billion and income increases by $280 billion. The value of the tax multiplier is

Accepted Answer

A)  -4. 
B)  -5. 
C)  -10. 
D)  -20. 
A)  -4. 
B)  -5. 
C)  -10. 
D)  -20.

Question 19

The aggregate consumption function is C = 1,200 + 0.4Yd. If income is $3,000 and net taxes are $400, consumption equals

Accepted Answer

A)  1,760. 
B)  2,240. 
C)  2,560. 
D)  2,760. 
A)  1,760. 
B)  2,240. 
C)  2,560. 
D)  2,760.

Question 20

The government purchases multiplier is

Accepted Answer

A)  the difference between the old equilibrium level of output and the new equilibrium level of output. 
B)  the ratio of the change in government purchases to the change in the equilibrium level of output. 
C)  the ratio of the change in the equilibrium level of output to a change in government purchases. 
D)  the difference between the new and old levels of government purchases. 
A)  the difference between the old equilibrium level of output and the new equilibrium level of output. 
B)  the ratio of the change in government purchases to the change in the equilibrium level of output. 
C)  the ratio of the change in the equilibrium level of output to a change in government purchases. 
D)  the difference between the new and old levels of government purchases.

The average tax rate increased during the 1993-2000 Clinton administrations.

Refer to the information provided in Table 9.5 below to answer the questions that follow. Table 9.5 All Numbers are in $ Million -Refer to Table 9.5. Suppose the economy is in equilibrium and the government increases spending by $50 million, the new equilibrium output is $________ million

Refer to the information provided in Figure 9.4 below to answer the questions that follow. Figure 9.4 -Refer to Figure 9.4. What is the value of Point B?

The value of the balanced-budget multiplier is

A government's debt is increased when it

The Norwegian economy can be characterized by Equation 9.3. EQUATION 9.3: C = 100 + 0.8Yd G = 500 T = 200 I = 200 -Refer to Equation 9.3. At the equilibrium level of output in Norway, leakages equal

When a government runs a deficit

Refer to the information provided in Table 9.8 below to answer the questions that follow. Table 9.8 All Figures in Billions of Dollars -Refer to Table 9.8. If taxes are reduced by $50 billion and government spending is reduced by $50 billion, the new equilibrium level of income

Refer to the information provided in Figure 9.1 below to answer the questions that follow. Figure 9.1 -Refer to Figure 9.1. Injections = leakages

A tax cut of $12 billion will have less effect on the economy than an increase in government purchases of $12 billion.

If the government runs a deficit, then the government debt increases.

The aggregate consumption function is C = 100 + 0.6Yd. If income is $1,000 and net taxes are $300, consumption equals

If planned injections exceed leakages, output will

Assume that in Agraria the actual deficit is $625 billion. If Agraria was at full employment, the deficit would be $325 billion. The structural deficit in Agraria is

After government is added to the income-expenditure model, the formula for the aggregate consumption function is

The Canadian economy can be characterized by Equation 9.2. EQUATION 9.2: C = 500 + 0.5Yd Taxes = 600 Equilibrium Output = $4,000 -Refer to Equation 9.2. At equilibrium leakages in Canada equal

Taxes are reduced by $70 billion and income increases by $280 billion. The value of the tax multiplier is

The aggregate consumption function is C = 1,200 + 0.4Yd. If income is $3,000 and net taxes are $400, consumption equals

The government purchases multiplier is

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Introduction to Macroeconomics

Measuring National Output and National Income

Unemployment, Inflation, and Long-Run Growth

Aggregate Expenditure and Equilibrium Output

Money, the Federal Reserve, and the Interest Rate

The Determination of Aggregate Output, the Price Level, and the Interest Rate

Policy Effects and Cost Shocks in the Asad Model

The Labor Market in the Macroeconomy

Financial Crises, Stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

International Trade, Comparative Advantage, and Protectionism

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

Exam 9: The Government and Fiscal Policy

The average tax rate increased during the 1993-2000 Clinton administrations.

Refer to the information provided in Table 9.5 below to answer the questions that follow. Table 9.5 All Numbers are in $ Million -Refer to Table 9.5. Suppose the economy is in equilibrium and the government increases spending by $50 million, the new equilibrium output is $________ million

Refer to the information provided in Figure 9.4 below to answer the questions that follow. Figure 9.4 -Refer to Figure 9.4. What is the value of Point B?

The value of the balanced-budget multiplier is

A government's debt is increased when it

The Norwegian economy can be characterized by Equation 9.3. EQUATION 9.3: C = 100 + 0.8Yd G = 500 T = 200 I = 200 -Refer to Equation 9.3. At the equilibrium level of output in Norway, leakages equal

When a government runs a deficit

Refer to the information provided in Table 9.8 below to answer the questions that follow. Table 9.8 All Figures in Billions of Dollars -Refer to Table 9.8. If taxes are reduced by $50 billion and government spending is reduced by $50 billion, the new equilibrium level of income

Refer to the information provided in Figure 9.1 below to answer the questions that follow. Figure 9.1 -Refer to Figure 9.1. Injections = leakages

A tax cut of $12 billion will have less effect on the economy than an increase in government purchases of $12 billion.

If the government runs a deficit, then the government debt increases.

The aggregate consumption function is C = 100 + 0.6Yd. If income is $1,000 and net taxes are $300, consumption equals

If planned injections exceed leakages, output will

Assume that in Agraria the actual deficit is $625 billion. If Agraria was at full employment, the deficit would be $325 billion. The structural deficit in Agraria is

After government is added to the income-expenditure model, the formula for the aggregate consumption function is

The Canadian economy can be characterized by Equation 9.2. EQUATION 9.2: C = 500 + 0.5Yd Taxes = 600 Equilibrium Output = $4,000 -Refer to Equation 9.2. At equilibrium leakages in Canada equal

Taxes are reduced by $70 billion and income increases by $280 billion. The value of the tax multiplier is

The aggregate consumption function is C = 1,200 + 0.4Yd. If income is $3,000 and net taxes are $400, consumption equals

The government purchases multiplier is

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Introduction to Macroeconomics

Measuring National Output and National Income

Unemployment, Inflation, and Long-Run Growth

Aggregate Expenditure and Equilibrium Output

Money, the Federal Reserve, and the Interest Rate

The Determination of Aggregate Output, the Price Level, and the Interest Rate

Policy Effects and Cost Shocks in the Asad Model

The Labor Market in the Macroeconomy

Financial Crises, Stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

International Trade, Comparative Advantage, and Protectionism

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing Economies

Critical Thinking About Research

Filters