Question 1

Once the expenditure schedule has been adjusted for tax levels,the determination of equilibrium GDP

Accepted Answer

A)  is no longer possible. 
B)  becomes much more difficult. 
C)  proceeds exactly as before. 
D)  requires a higher multiplier value. 
A)  is no longer possible. 
B)  becomes much more difficult. 
C)  proceeds exactly as before. 
D)  requires a higher multiplier value.

Question 2

If the federal government increases the amount of Social Security benefits for retired persons,then the

Accepted Answer

A)  consumption schedule will shift upward. 
B)  aggregate demand curve will shift outward. 
C)  effect on equilibrium GDP will be the same as a cut in taxes. 
D)  All of the above are correct. 
A)  consumption schedule will shift upward. 
B)  aggregate demand curve will shift outward. 
C)  effect on equilibrium GDP will be the same as a cut in taxes. 
D)  All of the above are correct.

Question 3

An increase in taxes shifts the

Accepted Answer

A)  aggregate supply curve outward. 
B)  aggregate demand curve outward. 
C)  consumption schedule upward. 
D)  consumption schedule downward. 
A)  aggregate supply curve outward. 
B)  aggregate demand curve outward. 
C)  consumption schedule upward. 
D)  consumption schedule downward.

Question 4

In an effort to balance the budget,the government cuts spending rather than increasing taxes.What will happen to the consumption schedule?

Accepted Answer

A)  It will become steeper. 
B)  It will become flatter. 
C)  It will shift upward. 
D)  It will shift downward. 
E)  It will remain the same and move along it. 
A)  It will become steeper. 
B)  It will become flatter. 
C)  It will shift upward. 
D)  It will shift downward. 
E)  It will remain the same and move along it.

Question 5

When taxes are decreased,disposable income increases even though GDP is unchanged.

Accepted Answer

A) True 
 B)False

Question 6

If the Bush tax cuts were allowed to expire in 2010,the maximum personal income tax rate in the United States would have moved above 50 percent.

Accepted Answer

A) True 
 B)False

Question 7

A reduction in the capital gains tax,often advocated by proponents of supply-side economics,is supposed to stimulate increased

Accepted Answer

A)  consumer spending. 
B)  net exports. 
C)  investment spending. 
D)  government spending. 
A)  consumer spending. 
B)  net exports. 
C)  investment spending. 
D)  government spending.

Question 8

In 2009,the U.S.economy was experiencing an inflationary gap.

Accepted Answer

A) True 
 B)False

Question 9

Government spending influences spending indirectly.

Accepted Answer

A) True 
 B)False

Question 10

Contractionary fiscal policy may have some undesirable consequences.Among these is

Accepted Answer

A)  higher unemployment. 
B)  higher inflation. 
C)  higher net exports. 
D)  larger federal deficits. 
A)  higher unemployment. 
B)  higher inflation. 
C)  higher net exports. 
D)  larger federal deficits.

Question 11

In 2009,the U.S.economy was experiencing a(n)

Accepted Answer

A)  recessionary gap. 
B)  inflationary gap. 
C)  balance of trade deficit. 
D)  hyperinflation. 
A)  recessionary gap. 
B)  inflationary gap. 
C)  balance of trade deficit. 
D)  hyperinflation.

Question 12

One objection to supply-side tax cuts is that demand-side changes

Accepted Answer

A)  are smaller than supply-side changes. 
B)  and supply-side changes are about equal. 
C)  are more unpredictable than supply-side changes. 
D)  are larger than supply-side changes. 
A)  are smaller than supply-side changes. 
B)  and supply-side changes are about equal. 
C)  are more unpredictable than supply-side changes. 
D)  are larger than supply-side changes.

Question 13

Taxes reduce total spending

Accepted Answer

A)  directly by increasing government purchases by an equal amount. 
B)  directly by substituting investment spending. 
C)  indirectly by reducing government spending. 
D)  indirectly by reducing disposable income. 
A)  directly by increasing government purchases by an equal amount. 
B)  directly by substituting investment spending. 
C)  indirectly by reducing government spending. 
D)  indirectly by reducing disposable income.

Question 14

Figure 11-3  
-Refer to Table 11-1.What is the level of tax revenues in this model?

Accepted Answer

A)  1,000 
B)  950 
C)  945.5 
D)  937.5 
E)  437.5 
A)  1,000 
B)  950 
C)  945.5 
D)  937.5 
E)  437.5

Question 15

Most supply-side initiatives have the effect of reducing inequality.

Accepted Answer

A) True 
 B)False

Question 16

One of the objectives of supply-side policies is to

Accepted Answer

A)  focus attention on the trade-off between inflation and unemployment. 
B)  sharpen the trade-off between inflation and unemployment. 
C)  eliminate the trade-off between inflation and unemployment. 
D)  convince the public of the trade-off between inflation and unemployment. 
A)  focus attention on the trade-off between inflation and unemployment. 
B)  sharpen the trade-off between inflation and unemployment. 
C)  eliminate the trade-off between inflation and unemployment. 
D)  convince the public of the trade-off between inflation and unemployment.

Question 17

There is some agreement between the beliefs of President George W.Bush in 2001 on the effectiveness of tax cuts with the beliefs of former President

Accepted Answer

A)  Keynes. 
B)  Clinton. 
C)  Reagan. 
D)  Carter. 
A)  Keynes. 
B)  Clinton. 
C)  Reagan. 
D)  Carter.

Question 18

Decreasing aggregate demand to eliminate an inflationary gap often creates the problem of

Accepted Answer

A)  unemployment. 
B)  increasing real GDP. 
C)  increasing inflation. 
D)  increasing the labor force. 
A)  unemployment. 
B)  increasing real GDP. 
C)  increasing inflation. 
D)  increasing the labor force.

Question 19

Critics of supply-side economics argue that a major flaw is

Accepted Answer

A)  the small magnitude of supply-side effects. 
B)  the large size of demand-side effects. 
C)  increased income inequality. 
D)  All of the above. 
A)  the small magnitude of supply-side effects. 
B)  the large size of demand-side effects. 
C)  increased income inequality. 
D)  All of the above.

Question 20

____ is the income actually available to the consumers that determines aggregate demand.

Accepted Answer

A)  Nominal income 
B)  Net domestic product 
C)  Income corrected for depreciation 
D)  Disposable income 
A)  Nominal income 
B)  Net domestic product 
C)  Income corrected for depreciation 
D)  Disposable income

Once the expenditure schedule has been adjusted for tax levels,the determination of equilibrium GDP

If the federal government increases the amount of Social Security benefits for retired persons,then the

An increase in taxes shifts the

In an effort to balance the budget,the government cuts spending rather than increasing taxes.What will happen to the consumption schedule?

When taxes are decreased,disposable income increases even though GDP is unchanged.

If the Bush tax cuts were allowed to expire in 2010,the maximum personal income tax rate in the United States would have moved above 50 percent.

A reduction in the capital gains tax,often advocated by proponents of supply-side economics,is supposed to stimulate increased

In 2009,the U.S.economy was experiencing an inflationary gap.

Government spending influences spending indirectly.

Contractionary fiscal policy may have some undesirable consequences.Among these is

In 2009,the U.S.economy was experiencing a(n)

One objection to supply-side tax cuts is that demand-side changes

Taxes reduce total spending

Figure 11-3 -Refer to Table 11-1.What is the level of tax revenues in this model?

Most supply-side initiatives have the effect of reducing inequality.

One of the objectives of supply-side policies is to

There is some agreement between the beliefs of President George W.Bush in 2001 on the effectiveness of tax cuts with the beliefs of former President

Decreasing aggregate demand to eliminate an inflationary gap often creates the problem of

Critics of supply-side economics argue that a major flaw is

____ is the income actually available to the consumers that determines aggregate demand.

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Bringing In The Supply Side Unemployment and Inflation

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

Filters

Exam 11: Managing Aggregate Demand Fiscal Policy

Once the expenditure schedule has been adjusted for tax levels,the determination of equilibrium GDP

If the federal government increases the amount of Social Security benefits for retired persons,then the

An increase in taxes shifts the

In an effort to balance the budget,the government cuts spending rather than increasing taxes.What will happen to the consumption schedule?

When taxes are decreased,disposable income increases even though GDP is unchanged.

If the Bush tax cuts were allowed to expire in 2010,the maximum personal income tax rate in the United States would have moved above 50 percent.

A reduction in the capital gains tax,often advocated by proponents of supply-side economics,is supposed to stimulate increased

In 2009,the U.S.economy was experiencing an inflationary gap.

Government spending influences spending indirectly.

Contractionary fiscal policy may have some undesirable consequences.Among these is

In 2009,the U.S.economy was experiencing a(n)

One objection to supply-side tax cuts is that demand-side changes

Taxes reduce total spending

Figure 11-3 -Refer to Table 11-1.What is the level of tax revenues in this model?

Most supply-side initiatives have the effect of reducing inequality.

One of the objectives of supply-side policies is to

There is some agreement between the beliefs of President George W.Bush in 2001 on the effectiveness of tax cuts with the beliefs of former President

Decreasing aggregate demand to eliminate an inflationary gap often creates the problem of

Critics of supply-side economics argue that a major flaw is

____ is the income actually available to the consumers that determines aggregate demand.

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Bringing In The Supply Side Unemployment and Inflation

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

Filters