Question 1

Which of the following is not included in "Entitlement and mandatory spending?"

Accepted Answer

A)  Medicare 
B)  Social Security 
C)  Defense 
D)  Medicaid

Question 2

Recall Application 3, "Evaluating the Obama Fiscal Stimulus" to answer the following questions:
-According to the application, President Obama's economic stimulus package in 2009 was the main reason why the economy went back to unemployment rates below 7 percent by 2009.

Accepted Answer

A) True 
 B)False

Question 3

A means tested program calculates the benefits of the recipient based on

Accepted Answer

A)  the government's budget. 
B)  the government's income. 
C)  the recipient's income. 
D)  the recipient's tax payments.

Question 4

Explain why ill- timed fiscal policies can magnify economic fluctuations instead of smoothing them out.

Accepted Answer

The answer of Explain why ill- timed fiscal policies can...

Question 5

If households base their consumption spending on permanent income, then a tax increase will decrease consumption only if the tax is deemed permanent.

Accepted Answer

A) True 
 B)False

Question 6

Once a problem has been diagnosed, it takes time for the government to take action. This is because any changes in taxes or government spending require approval from both houses of Congress and the president.

Accepted Answer

The answer of Once a problem has been diagnosed, it...

Question 7

Explain how the existence of lags limits the effectiveness of fiscal policy as a tool of economic stabilization.

Accepted Answer

The answer of Explain how the existence of lags limits...

Question 8

Which of the following is a federal and state health program that benefits the poor?

Accepted Answer

A)  Defense 
B)  Medicaid 
C)  Medicare 
D)  Social Security

Question 9

Recall Application 3, "Evaluating the Obama Fiscal Stimulus" to answer the following questions:
-According to the application, the Council of Economic Advisers estimated that the economic stimulus package implemented by President Obama:

Accepted Answer

A)  caused the unemployment rate of the U.S. to increase to 10 percent. 
B)  avoided the loss of 1 million jobs. 
C)  caused the loss of 1 million jobs. 
D)  had no effect on the US economy.

Question 10

The largest category of discretionary spending is/are:

Accepted Answer

A)  defense spending. 
B)  non- defense spending. 
C)  entitlements and mandatory spending. 
D)  net interest.

Question 11

Although running a budget deficit during a recession should not be a source of concern, running a budget deficit when there is no recession is a bad policy due to:

Accepted Answer

A)  long outside lags. 
B)  crowding out. 
C)  long inside lags. 
D)  crowding in.

Question 12

The permanent income view of consumption spending postulate that households base their spending on:

Accepted Answer

A)  their current income. 
B)  their highest level of income. 
C)  their average long- run income. 
D)  future income.

Question 13

At the end of the 1990s, the U.S. budget:

Accepted Answer

A)  was in deficit. 
B)  was balanced. 
C)  was in surplus. 
D)  none of the above

Question 14

Which of the following is not true?

Accepted Answer

A)  The federal budget deficit works as a sort of automatic economic stabilizer. 
B)  The selling of government securities to pay for a deficit spurs private investment spending. 
C)  Tax revenues move in the same direction as the business cycle. 
D)  Expenditures on transfer payments move in the opposite direction of the business cycle.

Question 15

"The budget surpluses incurred by the government during the late 1990s were purely due to the major tax increase implemented during Clinton's Administration." Do you agree or disagree?

Accepted Answer

The answer of "The budget surpluses incurred by the government...

Question 16

Figure 10.1
-Refer to Figure 10.1 to answer this question. Which of the following fiscal policies would move the economy from point B to point A?

Accepted Answer

A)  higher taxes 
B)  lower government spending 
C)  lower taxes 
D)  lower money supply

Question 17

The fiscal multiplier magnifies the impact of a change in government spending on the economy's short run aggregate supply.

Accepted Answer

A) True 
 B)False

Question 18

An increase in taxes or a decrease in spending will cause:

Accepted Answer

A)  the aggregate demand curve to the left. 
B)  the SR aggregate supply curve to the left. 
C)  the SR aggregate supply curve to the right. 
D)  the aggregate demand curve to the right.

Question 19

The highest tax rate for individuals during the Kennedy Administration was lower than the highest tax rate today.

Accepted Answer

A) True 
 B)False

Question 20

In 2009, federal taxes were about _______ percent of GDP.

Accepted Answer

A)  14.7 
B)  25 
C)  33 
D)  71

Exam 10: Fiscal Policy

Which of the following is not included in "Entitlement and mandatory spending?"

Recall Application 3, "Evaluating the Obama Fiscal Stimulus" to answer the following questions: -According to the application, President Obama's economic stimulus package in 2009 was the main reason why the economy went back to unemployment rates below 7 percent by 2009.

A means tested program calculates the benefits of the recipient based on

Explain why ill- timed fiscal policies can magnify economic fluctuations instead of smoothing them out.

If households base their consumption spending on permanent income, then a tax increase will decrease consumption only if the tax is deemed permanent.

Once a problem has been diagnosed, it takes time for the government to take action. This is because any changes in taxes or government spending require approval from both houses of Congress and the president.

Explain how the existence of lags limits the effectiveness of fiscal policy as a tool of economic stabilization.

Which of the following is a federal and state health program that benefits the poor?

Recall Application 3, "Evaluating the Obama Fiscal Stimulus" to answer the following questions: -According to the application, the Council of Economic Advisers estimated that the economic stimulus package implemented by President Obama:

The largest category of discretionary spending is/are:

Although running a budget deficit during a recession should not be a source of concern, running a budget deficit when there is no recession is a bad policy due to:

The permanent income view of consumption spending postulate that households base their spending on:

At the end of the 1990s, the U.S. budget:

Which of the following is not true?

"The budget surpluses incurred by the government during the late 1990s were purely due to the major tax increase implemented during Clinton's Administration." Do you agree or disagree?

Figure 10.1 -Refer to Figure 10.1 to answer this question. Which of the following fiscal policies would move the economy from point B to point A?

The fiscal multiplier magnifies the impact of a change in government spending on the economy's short run aggregate supply.

An increase in taxes or a decrease in spending will cause:

The highest tax rate for individuals during the Kennedy Administration was lower than the highest tax rate today.

In 2009, federal taxes were about _______ percent of GDP.