Question 1

From the point of view of firms, what makes Hall and Rabushka's flat tax a consumption tax?

Accepted Answer

The answer of From the point of view of firms,...

Question 2

Targeting a range of inflation rates, instead of a single inflation level, would:

Accepted Answer

A)  give Congress some "wiggle room" to meet employment targets. 
B)  give the central bank some "wiggle room" to meet employment targets. 
C)  prevent Congress from meeting employment targets. 
D)  prevent the central bank from meeting employment targets.

Question 3

Capital gains are heavily concentrated on:

Accepted Answer

A)  the poor. 
B)  the middle class. 
C)  the very wealthy. 
D)  the homeless.

Question 4

The budget deficit increases during economic booms and decreases during recessions.

Accepted Answer

A) True 
 B)False

Question 5

A sales tax is a form of consumption tax.

Accepted Answer

A) True 
 B)False

Question 6

Illustrate examples of the countercyclical effects of the automatic stabilizers.

Accepted Answer

The answer of Illustrate examples of the countercyclical effects of...

Question 7

What is meant by monetizing the debt?

Accepted Answer

The answer of What is meant by monetizing the debt?...

Question 8

Which of the following is true regarding the U.S. procedure on inflation targeting?

Accepted Answer

A)  The president sets a target that the Federal Reserve must follow. 
B)  The Federal Reserve has the authority to set its own inflation target and makes the target known to the public. 
C)  Congress sets a target that the Federal Reserve must follow. 
D)  The Federal Reserve does not have an explicit inflation target.

Question 9

Recall Application 3, "Is a VAT in our Future?" to answer the following questions.
-According to the application, what is the difficulty in imposing VAT in the U.S.?

Accepted Answer

A)  Some conservatives oppose the tax because the VAT is regressive. 
B)  Some liberals oppose the tax because the VAT is too efficient. 
C)  The US already imposes retail level taxes collected by state governments. 
D)  The VAT is a lot more difficult to collect than sales taxes.

Question 10

In most cases, a government generates inflation when it creates money to finance its expenditures.

Accepted Answer

A) True 
 B)False

Question 11

The "flat tax" is a form of consumption tax.

Accepted Answer

A) True 
 B)False

Question 12

If the Fed were to focus only on inflation:

Accepted Answer

A)  its capacity to fight recessions would be diminished. 
B)  the private sector would become less responsive to the Fed's policies. 
C)  its independence from political pressures would decrease. 
D)  its credibility would be reduced.

Question 13

Recall Application 1, "New Methods to Measure the Long-Term Fiscal Imbalances for the United States," to answer the
following questions:
-According to the application, Gokhale and Smetters method for measuring indebtedness:

Accepted Answer

A)  included the present value of the gap between deficits and revenues, and added it to the current GDP. 
B)  included the present value of the gap between deficits and debts, and added it to the current national revenues. 
C)  included the future value of the gap between deficits and revenues, and added it to the current national debt. 
D)  included the present value of the gap between deficits and revenues, and added it to the current national debt.

Question 14

An increase in the federal budget deficit will lower the level of crowding out in the economy.

Accepted Answer

A) True 
 B)False

Question 15

From the end of 1997 through 2000, the U.S. budget:

Accepted Answer

A)  deficit was decreasing as a percentage of GDP. 
B)  was in deficit. 
C)  was in surplus. 
D)  was balanced.

Question 16

If the government were to experience a budget deficit in the next three years, the government's total debt would:

Accepted Answer

A)  increase over the next three years. 
B)  decrease over the next three years. 
C)  stay the same over the next three years. 
D)  would increase only on the third year.

Question 17

Explain how unemployment compensation operates as an automatic stabilizer within the economy during a recession.

Accepted Answer

The answer of Explain how unemployment compensation operates as an...

Question 18

If the flat tax is 27 percent, a person who makes $3000 a month will have an income net of taxes equal to _______ a month.

Accepted Answer

A)  $810 
B)  $2190 
C)  $2730 
D)  $270

Question 19

Which of the following would lower the burden of increased government spending on future generations?

Accepted Answer

A)  increased spending to subsidize the losses of government owned enterprises 
B)  increased spending to subsidize consumption 
C)  increased spending to subsidize imported consumption goods 
D)  increased spending to subsidize education

Question 20

An income tax system can be converted to a consumption tax by:

Accepted Answer

A)  by not taxing food expenditures. 
B)  by not taxing corporate income. 
C)  not taxing earnings from saving. 
D)  not taxing income from a second job.

Exam 17: Macroeconomic Policy Debates

From the point of view of firms, what makes Hall and Rabushka's flat tax a consumption tax?

Targeting a range of inflation rates, instead of a single inflation level, would:

Capital gains are heavily concentrated on:

The budget deficit increases during economic booms and decreases during recessions.

A sales tax is a form of consumption tax.

Illustrate examples of the countercyclical effects of the automatic stabilizers.

What is meant by monetizing the debt?

Which of the following is true regarding the U.S. procedure on inflation targeting?

Recall Application 3, "Is a VAT in our Future?" to answer the following questions. -According to the application, what is the difficulty in imposing VAT in the U.S.?

In most cases, a government generates inflation when it creates money to finance its expenditures.

The "flat tax" is a form of consumption tax.

If the Fed were to focus only on inflation:

Recall Application 1, "New Methods to Measure the Long-Term Fiscal Imbalances for the United States," to answer the following questions: -According to the application, Gokhale and Smetters method for measuring indebtedness:

An increase in the federal budget deficit will lower the level of crowding out in the economy.

From the end of 1997 through 2000, the U.S. budget:

If the government were to experience a budget deficit in the next three years, the government's total debt would:

Explain how unemployment compensation operates as an automatic stabilizer within the economy during a recession.

If the flat tax is 27 percent, a person who makes $3000 a month will have an income net of taxes equal to _______ a month.

Which of the following would lower the burden of increased government spending on future generations?

An income tax system can be converted to a consumption tax by: