Question 1

Critics of supply-side policies argue that the effects of tax cuts are too small to be effective policy.

Accepted Answer

A) True 
 B)False

Question 2

Figure 11-1  
-In Figure 11-1,to reach the level of potential GDP,the administration of President Obama would most likely advocate

Accepted Answer

A)  increasing Social Security payments. 
B)  decreasing defense spending. 
C)  decreasing personal income taxes. 
D)  All of the above are correct. 
A)  increasing Social Security payments. 
B)  decreasing defense spending. 
C)  decreasing personal income taxes. 
D)  All of the above are correct.

Question 3

Critics of supply-side economics argue that tax cuts favored by supply-siders will have the greatest effect on

Accepted Answer

A)  aggregate supply. 
B)  tax receipts. 
C)  aggregate demand. 
D)  the money supply. 
A)  aggregate supply. 
B)  tax receipts. 
C)  aggregate demand. 
D)  the money supply.

Question 4

Taxes are the difference between

Accepted Answer

A)  GDP and net exports. 
B)  GDP and consumer spending. 
C)  Consumer spending and saving. 
D)  GDP and disposable income. 
A)  GDP and net exports. 
B)  GDP and consumer spending. 
C)  Consumer spending and saving. 
D)  GDP and disposable income.

Question 5

An increase in taxes will cause the consumption schedule to

Accepted Answer

A)  shift upward. 
B)  shift downward. 
C)  remain fixed as the economy moves upward along the schedule. 
D)  remain fixed as the economy moves downward along the schedule. 
A)  shift upward. 
B)  shift downward. 
C)  remain fixed as the economy moves upward along the schedule. 
D)  remain fixed as the economy moves downward along the schedule.

Question 6

Taxes,transfer payments,and government purchases are the components of automatic stabilizers.

Accepted Answer

A) True 
 B)False

Question 7

Conservatives usually favor increasing government spending to increase aggregate demand.

Accepted Answer

A) True 
 B)False

Question 8

If a "conservative" wanted to increase aggregate demand,which of the following would she tend to favor?

Accepted Answer

A)  An increase in government spending,because it has a larger multiplier than tax changes. 
B)  A decrease in transfer payments,because it keeps the public sector small. 
C)  An increase in transfer payments,because it has a larger multiplier than tax changes. 
D)  A decrease in taxes,because it makes the public sector smaller. 
A)  An increase in government spending,because it has a larger multiplier than tax changes. 
B)  A decrease in transfer payments,because it keeps the public sector small. 
C)  An increase in transfer payments,because it has a larger multiplier than tax changes. 
D)  A decrease in taxes,because it makes the public sector smaller.

Question 9

An increase in Social Security payments to retired persons has what effect on equilibrium income?

Accepted Answer

A)  GDP will fall. 
B)  GDP will rise. 
C)  GDP will remain the same. 
D)  GDP will fall by less than the increase in payments. 
A)  GDP will fall. 
B)  GDP will rise. 
C)  GDP will remain the same. 
D)  GDP will fall by less than the increase in payments.

Question 10

Which of the following observations is true?

Accepted Answer

A)  Increase in taxes shifts the consumption schedule upward. 
B)  Tax reductions increase equilibrium GDP. 
C)  Taxes reduce total spending directly. 
D)  Taxes do not have a multiplier effect on equilibrium GDP. 
A)  Increase in taxes shifts the consumption schedule upward. 
B)  Tax reductions increase equilibrium GDP. 
C)  Taxes reduce total spending directly. 
D)  Taxes do not have a multiplier effect on equilibrium GDP.

Question 11

The reason that the multiplier is smaller if there are variable taxes is that

Accepted Answer

A)  taxes add to government spending,which increases income. 
B)  people get angry about taxes and decide to work less. 
C)  tax increases shift the expenditure line upward. 
D)  part of an increase in income is taken away in taxes. 
A)  taxes add to government spending,which increases income. 
B)  people get angry about taxes and decide to work less. 
C)  tax increases shift the expenditure line upward. 
D)  part of an increase in income is taken away in taxes.

Question 12

Income taxes and transfer payments help prevent extreme macroeconomic fluctuations.

Accepted Answer

A) True 
 B)False

Question 13

Government purchases have the same multiplier effect as business investment spending.

Accepted Answer

A) True 
 B)False

Question 14

In macroeconomic analysis,a transfer payment is considered a

Accepted Answer

A)  positive tax. 
B)  fixed tax. 
C)  negative tax. 
D)  variable tax. 
A)  positive tax. 
B)  fixed tax. 
C)  negative tax. 
D)  variable tax.

Question 15

The multiplier is increased when income taxes are included.

Accepted Answer

A) True 
 B)False

Question 16

If a "liberal" wanted to increase aggregate demand,which of the following would she tend to favor?

Accepted Answer

A)  An increase in government spending,because it will increase the size of the public sector. 
B)  A decrease in transfer payments,because it keeps the public sector small. 
C)  An increase in transfer payments,because it has a larger multiplier than tax changes. 
D)  A decrease in taxes,because it makes the public sector smaller. 
A)  An increase in government spending,because it will increase the size of the public sector. 
B)  A decrease in transfer payments,because it keeps the public sector small. 
C)  An increase in transfer payments,because it has a larger multiplier than tax changes. 
D)  A decrease in taxes,because it makes the public sector smaller.

Question 17

Why did President Obama want to repeal the Bush era tax cuts on upper income taxpayers? How would the repeal of these tax cuts impact aggregate demand and to what degree? How did the economic conditions in 2010 make such a repeal less likely to take place?

Accepted Answer

President Obama wanted to repeal the Bus

Question 18

Raising taxes or increasing transfer payments would reduce total spending.

Accepted Answer

A) True 
 B)False

Question 19

Transfer payments represent income that is not earned but received by individuals.

Accepted Answer

A) True 
 B)False

Question 20

Government can raise GDP by $1,000 billion by:

Accepted Answer

A)  ​raising government purchases 
B)  ​reducing taxes 
C)  ​increasing transfer payments 
D)  ​All of the above. 
A)  ​raising government purchases 
B)  ​reducing taxes 
C)  ​increasing transfer payments 
D)  ​All of the above.

Critics of supply-side policies argue that the effects of tax cuts are too small to be effective policy.

Figure 11-1 -In Figure 11-1,to reach the level of potential GDP,the administration of President Obama would most likely advocate

Critics of supply-side economics argue that tax cuts favored by supply-siders will have the greatest effect on

Taxes are the difference between

An increase in taxes will cause the consumption schedule to

Taxes,transfer payments,and government purchases are the components of automatic stabilizers.

Conservatives usually favor increasing government spending to increase aggregate demand.

If a "conservative" wanted to increase aggregate demand,which of the following would she tend to favor?

An increase in Social Security payments to retired persons has what effect on equilibrium income?

Which of the following observations is true?

The reason that the multiplier is smaller if there are variable taxes is that

Income taxes and transfer payments help prevent extreme macroeconomic fluctuations.

Government purchases have the same multiplier effect as business investment spending.

In macroeconomic analysis,a transfer payment is considered a

The multiplier is increased when income taxes are included.

If a "liberal" wanted to increase aggregate demand,which of the following would she tend to favor?

Why did President Obama want to repeal the Bush era tax cuts on upper income taxpayers? How would the repeal of these tax cuts impact aggregate demand and to what degree? How did the economic conditions in 2010 make such a repeal less likely to take place?

Raising taxes or increasing transfer payments would reduce total spending.

Transfer payments represent income that is not earned but received by individuals.

Government can raise GDP by $1,000 billion by:

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

Critics of supply-side policies argue that the effects of tax cuts are too small to be effective policy.

Figure 11-1 -In Figure 11-1,to reach the level of potential GDP,the administration of President Obama would most likely advocate

Critics of supply-side economics argue that tax cuts favored by supply-siders will have the greatest effect on

Taxes are the difference between

An increase in taxes will cause the consumption schedule to

Taxes,transfer payments,and government purchases are the components of automatic stabilizers.

Conservatives usually favor increasing government spending to increase aggregate demand.

If a "conservative" wanted to increase aggregate demand,which of the following would she tend to favor?

An increase in Social Security payments to retired persons has what effect on equilibrium income?

Which of the following observations is true?

The reason that the multiplier is smaller if there are variable taxes is that

Income taxes and transfer payments help prevent extreme macroeconomic fluctuations.

Government purchases have the same multiplier effect as business investment spending.

In macroeconomic analysis,a transfer payment is considered a

The multiplier is increased when income taxes are included.

If a "liberal" wanted to increase aggregate demand,which of the following would she tend to favor?

Why did President Obama want to repeal the Bush era tax cuts on upper income taxpayers? How would the repeal of these tax cuts impact aggregate demand and to what degree? How did the economic conditions in 2010 make such a repeal less likely to take place?

Raising taxes or increasing transfer payments would reduce total spending.

Transfer payments represent income that is not earned but received by individuals.

Government can raise GDP by $1,000 billion by:

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