Question 1

"Fiscal Policy" is the federal government's plan for

Accepted Answer

A)  international trade, designed to balance exports and imports. 
B)  spending and taxes, designed to influence the level of aggregate demand. 
C)  manipulating the money supply and the control of interest rates. 
D)  All of the above are correct. 
A)  international trade, designed to balance exports and imports. 
B)  spending and taxes, designed to influence the level of aggregate demand. 
C)  manipulating the money supply and the control of interest rates. 
D)  All of the above are correct.

Question 2

Assume that the federal government wishes to counteract inflation with a policy that has the smallest impact on the federal budget.Which of the following would you recommend?

Accepted Answer

A)  Increase transfer payments. 
B)  Increase government purchases. 
C)  Decrease government purchases. 
D)  Decrease transfer payments. 
E)  Increase personal income taxes. 
A)  Increase transfer payments. 
B)  Increase government purchases. 
C)  Decrease government purchases. 
D)  Decrease transfer payments. 
E)  Increase personal income taxes.

Question 3

During the deliberations on fiscal stimulus in 2009, the debate over fiscal policy focused on

Accepted Answer

A)  the multiplier effect of tax cuts versus higher government spending. 
B)  the multiplier effect of different types of tax cuts. 
C)  the incentive effects of tax cuts. 
D)  all of the above 
A)  the multiplier effect of tax cuts versus higher government spending. 
B)  the multiplier effect of different types of tax cuts. 
C)  the incentive effects of tax cuts. 
D)  all of the above

Question 4

When government increases a fixed tax, consumption schedule

Accepted Answer

A)  shifts downward in a parallel manner. 
B)  shifts upward in a parallel manner. 
C)  becomes horizontal. 
D)  becomes vertical. 
A)  shifts downward in a parallel manner. 
B)  shifts upward in a parallel manner. 
C)  becomes horizontal. 
D)  becomes vertical.

Question 5

If a state government reduces property taxes for residents at the same time that it increases the state income tax, what will happen to the expenditures schedule of the residents of this state?

Accepted Answer

A)  It shifts upward. 
B)  It shifts downward. 
C)  It becomes less steep. 
D)  It becomes steeper. 
E)  It does not change. 
A)  It shifts upward. 
B)  It shifts downward. 
C)  It becomes less steep. 
D)  It becomes steeper. 
E)  It does not change.

Question 6

Critics of supply-side economics argue that

Accepted Answer

A)  tax cuts do not affect supply, only demand. 
B)  supply-siders exaggerate the effects of tax cuts. 
C)  incentives have no effect on behavior. 
D)  the goals of supply-siders are not supported by most economists. 
A)  tax cuts do not affect supply, only demand. 
B)  supply-siders exaggerate the effects of tax cuts. 
C)  incentives have no effect on behavior. 
D)  the goals of supply-siders are not supported by most economists.

Question 7

Appropriate fiscal policy in the U.S.in 2009 would attempt to

Accepted Answer

A)  increase taxes. 
B)  decrease aggregate supply. 
C)  increase aggregate demand. 
D)  decrease aggregate demand. 
A)  increase taxes. 
B)  decrease aggregate supply. 
C)  increase aggregate demand. 
D)  decrease aggregate demand.

Question 8

The central idea of supply-side tax cuts is that certain types of tax cuts will increase

Accepted Answer

A)  aggregate demand. 
B)  aggregate supply. 
C)  the supply of imports. 
D)  the supply of money. 
A)  aggregate demand. 
B)  aggregate supply. 
C)  the supply of imports. 
D)  the supply of money.

Question 9

Discuss some of the general conclusions arrived at about supply-side tax initiatives.

Accepted Answer

1.The likely effectiveness of supply-sid

Question 10

Fiscal policy is the use of taxes and spending by the government to affect aggregate demand.

Accepted Answer

A) True 
 B)False

Question 11

Figure 11-2
  
-Which graph in Figure 11-2 best reflects a supply-sider's view of the impact of an increase in the personal income tax rate?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 12

Transfer payments are income that is

Accepted Answer

A)  earned but not received. 
B)  received but not spent. 
C)  spent but not earned. 
D)  received but not earned. 
A)  earned but not received. 
B)  received but not spent. 
C)  spent but not earned. 
D)  received but not earned.

Question 13

If Congress votes to increase government purchases and at the same time decrease personal income taxes, they

Accepted Answer

A)  have decided to balance the federal budget. 
B)  have voted for the proper policy to counteract a recessionary gap. 
C)  have voted for the proper policy to counteract an inflationary gap. 
D)  are trying to achieve a federal budget surplus. 
A)  have decided to balance the federal budget. 
B)  have voted for the proper policy to counteract a recessionary gap. 
C)  have voted for the proper policy to counteract an inflationary gap. 
D)  are trying to achieve a federal budget surplus.

Question 14

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 15

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 16

If the federal government wishes to move the economy out of a recessionary gap, the appropriate fiscal policy is a(n)

Accepted Answer

A)  increase in taxes. 
B)  decrease in government purchases. 
C)  decrease in transfer payments. 
D)  None of the above are correct. 
A)  increase in taxes. 
B)  decrease in government purchases. 
C)  decrease in transfer payments. 
D)  None of the above are correct.

Question 17

For liberals, the United States has a(n)

Accepted Answer

A)  public sector that is too large. 
B)  private sector that is too small. 
C)  economy that is too heavily regulated. 
D)  public sector that is too small. 
A)  public sector that is too large. 
B)  private sector that is too small. 
C)  economy that is too heavily regulated. 
D)  public sector that is too small.

Question 18

A fiscal policy that reduces taxes or increases government spending will cause a(n)

Accepted Answer

A)  increase in real GDP and a decrease in the price level. 
B)  increase in real GDP and an increase in the price level. 
C)  decrease in real GDP and a decrease in the price level. 
D)  decrease in real GDP and an increase in the price level. 
A)  increase in real GDP and a decrease in the price level. 
B)  increase in real GDP and an increase in the price level. 
C)  decrease in real GDP and a decrease in the price level. 
D)  decrease in real GDP and an increase in the price level.

Question 19

Personal income taxes and corporate income taxes are examples of ____ taxes.

Accepted Answer

A)  variable 
B)  sales 
C)  fixed 
D)  disposable 
A)  variable 
B)  sales 
C)  fixed 
D)  disposable

Question 20

What is the difference between tax cuts imposed on higher-income households compared with lower- and middle-income households? Discuss the implications for the multiplier and the effectiveness of the tax cuts for boosting GDP.

Accepted Answer

Higher-income households tend to save a

Exam 28: Managing Aggregate Demand: Fiscal Policy

"Fiscal Policy" is the federal government's plan for

Assume that the federal government wishes to counteract inflation with a policy that has the smallest impact on the federal budget.Which of the following would you recommend?

During the deliberations on fiscal stimulus in 2009, the debate over fiscal policy focused on

When government increases a fixed tax, consumption schedule

If a state government reduces property taxes for residents at the same time that it increases the state income tax, what will happen to the expenditures schedule of the residents of this state?

Critics of supply-side economics argue that

Appropriate fiscal policy in the U.S.in 2009 would attempt to

The central idea of supply-side tax cuts is that certain types of tax cuts will increase

Discuss some of the general conclusions arrived at about supply-side tax initiatives.

Fiscal policy is the use of taxes and spending by the government to affect aggregate demand.

Figure 11-2 -Which graph in Figure 11-2 best reflects a supply-sider's view of the impact of an increase in the personal income tax rate?

Transfer payments are income that is

If Congress votes to increase government purchases and at the same time decrease personal income taxes, they

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

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?

If the federal government wishes to move the economy out of a recessionary gap, the appropriate fiscal policy is a(n)

For liberals, the United States has a(n)

A fiscal policy that reduces taxes or increases government spending will cause a(n)

Personal income taxes and corporate income taxes are examples of ____ taxes.

What is the difference between tax cuts imposed on higher-income households compared with lower- and middle-income households? Discuss the implications for the multiplier and the effectiveness of the tax cuts for boosting GDP.

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: The Importance of Marginal Analysis

Securities: Business Finance, and the Economy: The Tail that Wags the Dog?

The Firm and the Industry under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets I: The Price System

The Shortcomings of Free Markets

The Market's Prime Achievement: Innovation and Growth

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: The Human Inputs

Poverty, Inequality, and Discrimination

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

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