Question 1

By 2012, the dollar value of the debt:

Accepted Answer

A)   past 100 percent of GDP.
B)   the lowest in the U.S. history.
C)   was reduced to $500 billion.
D)   back down to 40 percent of GDP.E) A) and B)
F) A) and C)

Question 2

When output deviates from potential GDP, automatic stabilizers work to push the economy:

Accepted Answer

A)   in the same direction that correctly timed and formulated discretionary policy would.
B)   in the opposite direction that correctly timed and formulated discretionary policy would.
C)   in unpredictable ways, causing a need for discretionary policy.
D)   even further from its long-run equilibrium.E) A) and B)
F) None of the above

Question 3

A budget surplus is the:

Accepted Answer

A)   amount of money a government spends beyond the net revenue it brings in.
B)   amount of net revenue a government brings in beyond what it spends.
C)   total amount of money that a government owes.
D)   total amount of money that a government receives from a tax increase.E) None of the above
F) B) and D)

Question 4

Maude is complaining about how much she pays in taxes now that the economy is finally doing really well. Even though she's in the same tax bracket as she was last year, she's paying $500 more in taxes this year, just because she earned more overtime pay this year. Maude's increased tax payment to the government is an example of:

Accepted Answer

A)   expansionary fiscal policy.
B)   contractionary fiscal policy.
C)   discretionary fiscal policy.
D)   automatic stabilizers.E) All of the above
F) A) and D)

Question 5

A difficulty with effective fiscal policy is the:

Accepted Answer

A)   reality of time lags.
B)   guess as to what potential GDP is.
C)   lack of relevant information needed to decide the magnitude of change.
D)   All of these are true.E) All of the above
F) B) and C)

Question 6

The government budget involves:

Accepted Answer

A)   money coming in as tax revenues.
B)   money going out through government purchases.
C)   money going out to individuals for programs that do not involve goods or services.
D)   All of these are true.E) All of the above
F) C) and D)

Question 7

The longest term security sold by the US is the:

Accepted Answer

A)   Treasury bonds.
B)   Treasury notes.
C)   certificate of deposit.
D)   Treasury bills.E) All of the above
F) C) and D)

Question 8

When economists express the deficit, they generally do it as:

Accepted Answer

A)   the total amount the government overspent.
B)   a percentage of total GDP.
C)   a percentage of the amount of taxes they collect.
D)   a partitioned amount based on where the government spent the money.E) All of the above
F) A) and B)

Question 9

Increased government spending is an example of:

Accepted Answer

A)   expansionary fiscal policy.
B)   contractionary fiscal policy.
C)   expansionary monetary policy.
D)   contractionary monetary policy.E) A) and C)
F) A) and B)

Question 10

According to the graph shown, if the government decides to increase taxes, it is most likely at equilibrium:

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) B) and D)
F) A) and B)

Question 11

The existing tax rates on income in the United States:

Accepted Answer

A)   act as an automatic stabilizer.
B)   curtail spending slightly when incomes rise because people have to pay more in taxes when incomes are high.
C)   encourage spending slightly when incomes fall because people pay less in taxes when incomes are low.
D)   All of these are true.E) A) and B)
F) B) and C)

Question 12

If the government engages in contractionary fiscal policy a likely reason would be:

Accepted Answer

A)   they think the economy is not growing fast enough and they want to speed it up.
B)   people are not spending enough money and they want to boost spending.
C)   the economy is operating at a level that is just below full employment.
D)   they think the economy is growing too quickly and they want to slow it down.E) All of the above
F) None of the above

Question 13

If the government increases the income tax rate, consumers have:

Accepted Answer

A)   less to spend and will reduce their consumption.
B)   more to spend and will reduce their consumption.
C)   less to spend and will increase their consumption.
D)   more to spend and will increase their consumption.E) B) and D)
F) B) and C)

Question 14

Fiscal policy is:

Accepted Answer

A)   government decisions about the level of taxation and public spending.
B)   congressional budget office decisions.
C)   the decisions that affect the available money supply in the economy.
D)   government decisions about the level of the interest rate in the economy.E) A) and D)
F) A) and B)

Question 15

Fiscal policy most directly affects the economy by increasing or decreasing:

Accepted Answer

A)   aggregate demand.
B)   interest rate.
C)   long-run aggregate supply.
D)   the money supply.E) C) and D)
F) A) and B)

Exam 13: Fiscal Policy

The government budget involves:

Correct Answer
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Correct Answer
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A budget surplus is the:

Correct Answer
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A difficulty with effective fiscal policy is the:

Correct Answer
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If the government engages in contractionary fiscal policy a likely reason would be:

Correct Answer
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The longest term security sold by the US is the:

Correct Answer
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The existing tax rates on income in the United States:

Correct Answer
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If the government increases the income tax rate, consumers have:

Correct Answer
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Increased government spending is an example of:

Correct Answer
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By 2012, the dollar value of the debt:

Correct Answer
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When output deviates from potential GDP, automatic stabilizers work to push the economy:

Correct Answer
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When economists express the deficit, they generally do it as:

Correct Answer
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Fiscal policy is:

Correct Answer
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Fiscal policy most directly affects the economy by increasing or decreasing:

Correct Answer
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According to the graph shown, if the government decides to increase taxes, it is most likely at equilibrium:

Correct Answer
verified

Exam 13: Fiscal Policy

The government budget involves:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A budget surplus is the:

Correct AnswerverifiedShow Answer

A difficulty with effective fiscal policy is the:

Correct AnswerverifiedShow Answer

If the government engages in contractionary fiscal policy a likely reason would be:

Correct AnswerverifiedShow Answer

The longest term security sold by the US is the:

Correct AnswerverifiedShow Answer

The existing tax rates on income in the United States:

Correct AnswerverifiedShow Answer

If the government increases the income tax rate, consumers have:

Correct AnswerverifiedShow Answer

Increased government spending is an example of:

Correct AnswerverifiedShow Answer

By 2012, the dollar value of the debt:

Correct AnswerverifiedShow Answer

When output deviates from potential GDP, automatic stabilizers work to push the economy:

Correct AnswerverifiedShow Answer

When economists express the deficit, they generally do it as:

Correct AnswerverifiedShow Answer

Fiscal policy is:

Correct AnswerverifiedShow Answer

Fiscal policy most directly affects the economy by increasing or decreasing:

Correct AnswerverifiedShow Answer

According to the graph shown, if the government decides to increase taxes, it is most likely at equilibrium:

Correct AnswerverifiedShow Answer

Correct Answer
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