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

Which of the following observations is t?

Accepted Answer

A)  Tax changes have no impact on the consumption schedule. 
B)  Tax reduction shifts the consumption schedule upward. 
C)  Changes in taxes have a multiplier effect on equilibrium GDP on the supply side. 
D)  Tax increases increase equilibrium GDP. 
A)  Tax changes have no impact on the consumption schedule. 
B)  Tax reduction shifts the consumption schedule upward. 
C)  Changes in taxes have a multiplier effect on equilibrium GDP on the supply side. 
D)  Tax increases increase equilibrium GDP.

Question 3

Compared to an economy's self-correcting mechanism,active contractionary fiscal policy will

Accepted Answer

A)  work more slowly and calmly. 
B)  work more quickly. 
C)  have less deflationary effects. 
D)  have a smaller effect on real GDP. 
A)  work more slowly and calmly. 
B)  work more quickly. 
C)  have less deflationary effects. 
D)  have a smaller effect on real GDP.

Question 4

Policy makers and citizens who want to expand the size of the government sector would favor stabilization policies that

Accepted Answer

A)  raise G to eliminate a recessionary gap and lower taxes to eliminate an inflationary gap. 
B)  raise G to eliminate a recessionary gap and raise taxes to eliminate an inflationary gap. 
C)  reduce taxes to eliminate a recessionary gap and raise G to eliminate an inflationary gap. 
D)  reduce taxes to eliminate a recessionary gap and reduce G to eliminate an inflationary gap. 
A)  raise G to eliminate a recessionary gap and lower taxes to eliminate an inflationary gap. 
B)  raise G to eliminate a recessionary gap and raise taxes to eliminate an inflationary gap. 
C)  reduce taxes to eliminate a recessionary gap and raise G to eliminate an inflationary gap. 
D)  reduce taxes to eliminate a recessionary gap and reduce G to eliminate an inflationary gap.

Question 5

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 6

Why does a tax change affect aggregate demand?

Accepted Answer

A)  A tax change alters saving by an equal amount. 
B)  A tax change alters imports and net exports. 
C)  A tax change alters government spending by an equal amount. 
D)  A tax change alters disposable income and consumption spending. 
A)  A tax change alters saving by an equal amount. 
B)  A tax change alters imports and net exports. 
C)  A tax change alters government spending by an equal amount. 
D)  A tax change alters disposable income and consumption spending.

Question 7

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 8

Federal budget deficits are often increased by supply-side policies because of their reliance on

Accepted Answer

A)  income tax cuts. 
B)  income tax increases. 
C)  increased government spending. 
D)  decreased government spending. 
A)  income tax cuts. 
B)  income tax increases. 
C)  increased government spending. 
D)  decreased government spending.

Question 9

If the value of the multiplier is smaller,the economy

Accepted Answer

A)  becomes less stable because automatic stabilizers have a larger impact. 
B)  becomes more stable because automatic stabilizers have a larger impact. 
C)  becomes more volatile because automatic stabilizers have a lesser impact. 
D)  is subject to larger fluctuations because automatic stabilizers have no impact. 
A)  becomes less stable because automatic stabilizers have a larger impact. 
B)  becomes more stable because automatic stabilizers have a larger impact. 
C)  becomes more volatile because automatic stabilizers have a lesser impact. 
D)  is subject to larger fluctuations because automatic stabilizers have no impact.

Question 10

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 11

The use of spending and taxes by the government to influence aggregate demand is known as

Accepted Answer

A)  monetary policy. 
B)  governmental policy. 
C)  administrative policy. 
D)  fiscal policy. 
E)  federal policy. 
A)  monetary policy. 
B)  governmental policy. 
C)  administrative policy. 
D)  fiscal policy. 
E)  federal policy.

Question 12

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 13

What are the policies usually advocated by supply side economists? How do they justify these proposals?

Accepted Answer

Following are the usual suggestions:
Fol

Question 14

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 15

President Obama would generally advocate increased spending when the economy needs stimulus and increased taxation when the economy needs to be restricted.

Accepted Answer

A) True 
 B)False

Question 16

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 17

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 18

To eliminate an inflationary gap,the aggregate demand curve should

Accepted Answer

A)  shift outward. 
B)  become vertical. 
C)  become horizontal. 
D)  shift inward. 
A)  shift outward. 
B)  become vertical. 
C)  become horizontal. 
D)  shift inward.

Question 19

For any given change in taxes,the multiplier

Accepted Answer

A)  will work indirectly through consumption. 
B)  effect will occur in two steps. 
C)  effect will be smaller than for an equivalent dollar change in government spending. 
D)  All of the above are correct. 
A)  will work indirectly through consumption. 
B)  effect will occur in two steps. 
C)  effect will be smaller than for an equivalent dollar change in government spending. 
D)  All of the above are correct.

Question 20

For conservatives,the United States needs

Accepted Answer

A)  an expanded public sector to protect consumers. 
B)  a smaller public sector and less regulation. 
C)  a larger tax rate and more government spending. 
D)  more public goods and services, such as national health care. 
A)  an expanded public sector to protect consumers. 
B)  a smaller public sector and less regulation. 
C)  a larger tax rate and more government spending. 
D)  more public goods and services, such as national health care.

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

Which of the following observations is t?

Compared to an economy's self-correcting mechanism,active contractionary fiscal policy will

Policy makers and citizens who want to expand the size of the government sector would favor stabilization policies that

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

Why does a tax change affect aggregate demand?

An increase in taxes shifts the

Federal budget deficits are often increased by supply-side policies because of their reliance on

If the value of the multiplier is smaller,the economy

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

The use of spending and taxes by the government to influence aggregate demand is known as

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

What are the policies usually advocated by supply side economists? How do they justify these proposals?

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

President Obama would generally advocate increased spending when the economy needs stimulus and increased taxation when the economy needs to be restricted.

In macroeconomic analysis,a transfer payment is considered a

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

To eliminate an inflationary gap,the aggregate demand curve should

For any given change in taxes,the multiplier

For conservatives,the United States needs

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

Which of the following observations is t?

Compared to an economy's self-correcting mechanism,active contractionary fiscal policy will

Policy makers and citizens who want to expand the size of the government sector would favor stabilization policies that

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

Why does a tax change affect aggregate demand?

An increase in taxes shifts the

Federal budget deficits are often increased by supply-side policies because of their reliance on

If the value of the multiplier is smaller,the economy

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

The use of spending and taxes by the government to influence aggregate demand is known as

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

What are the policies usually advocated by supply side economists? How do they justify these proposals?

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

President Obama would generally advocate increased spending when the economy needs stimulus and increased taxation when the economy needs to be restricted.

In macroeconomic analysis,a transfer payment is considered a

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

To eliminate an inflationary gap,the aggregate demand curve should

For any given change in taxes,the multiplier

For conservatives,the United States needs

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