Question 1

Conservatives usually favor increasing government spending to increase aggregate demand.

Accepted Answer

A) True 
 B)False

Question 2

How does an increase in taxes affect the expenditure schedule?

Accepted Answer

A)  It causes movement to the left along the schedule. 
B)  It causes the schedule to shift upward. 
C)  It causes movement to the right along the schedule. 
D)  It causes the schedule to shift downward. 
A)  It causes movement to the left along the schedule. 
B)  It causes the schedule to shift upward. 
C)  It causes movement to the right along the schedule. 
D)  It causes the schedule to shift downward.

Question 3

One of the practical issues in the choice of government spending or taxes to change aggregate demand is how large a

Accepted Answer

A)  change in demand we want. 
B)  trade deficit we want. 
C)  budget deficit we want. 
D)  government sector we want. 
A)  change in demand we want. 
B)  trade deficit we want. 
C)  budget deficit we want. 
D)  government sector we want.

Question 4

If personal income tax rates are decreased in an attempt to stimulate spending,we should expect to see

Accepted Answer

A)  an increase in consumption and an increase in GDP. 
B)  an increase in consumption and a decrease in GDP. 
C)  a decrease in consumption and a decrease in GDP. 
D)  a decrease in consumption and an increase in GDP. 
A)  an increase in consumption and an increase in GDP. 
B)  an increase in consumption and a decrease in GDP. 
C)  a decrease in consumption and a decrease in GDP. 
D)  a decrease in consumption and an increase in GDP.

Question 5

If all variable taxes in the United States were removed and only fixed taxes remained,what would be the effect on the expenditures schedule?

Accepted Answer

A)  The expenditure schedule will shift upward and become steeper. 
B)  The expenditure schedule will shift upward and become less steep. 
C)  The expenditure schedule will shift downward and become less steep. 
D)  The expenditure schedule will shift downward and become steeper. 
A)  The expenditure schedule will shift upward and become steeper. 
B)  The expenditure schedule will shift upward and become less steep. 
C)  The expenditure schedule will shift downward and become less steep. 
D)  The expenditure schedule will shift downward and become steeper.

Question 6

Figure 11-2
  
-Which graph in Figure 11-2 best reflects a Keynesian's view of the impact of raising taxes on saving?

Accepted Answer

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

Question 7

If income tax rates are increased in an attempt to balance the federal budget,we should expect to see

Accepted Answer

A)  an increase in consumption and a decrease in GDP. 
B)  an increase in consumption and an increase in GDP. 
C)  a decrease in consumption and a decrease in GDP. 
D)  a decrease in consumption and an increase in GDP. 
A)  an increase in consumption and a decrease in GDP. 
B)  an increase in consumption and an increase in GDP. 
C)  a decrease in consumption and a decrease in GDP. 
D)  a decrease in consumption and an increase in GDP.

Question 8

Changes in government spending

Accepted Answer

A)  are an indirect component of the expenditures schedule. 
B)  have a different multiplier effect than changes in business investment spending. 
C)  are a direct component of the expenditures schedule and have the same multiplier effect as changes in business investment spending. 
D)  do not have an effect on spending if they are matched by tax changes. 
A)  are an indirect component of the expenditures schedule. 
B)  have a different multiplier effect than changes in business investment spending. 
C)  are a direct component of the expenditures schedule and have the same multiplier effect as changes in business investment spending. 
D)  do not have an effect on spending if they are matched by tax changes.

Question 9

Figure 11-3
  
-In Figure 11-3,which line represents the change in the consumption schedule caused by an increase in the residential property tax?

Accepted Answer

A)  C1 in graph (a) 
B)  C2 in graph (a) 
C)  C1 in graph (b) 
D)  C2 in graph (b) 
A)  C1 in graph (a) 
B)  C2 in graph (a) 
C)  C1 in graph (b) 
D)  C2 in graph (b)

Question 10

Table 11-1
  
-Refer to Table 11-1.What is the equilibrium level of income in this model?

Accepted Answer

A)  5,000 
B)  4,500 
C)  3,750 
D)  3,500 
E)  3,250 
A)  5,000 
B)  4,500 
C)  3,750 
D)  3,500 
E)  3,250

Question 11

In the determination of disposable income,transfer payments are treated as if they

Accepted Answer

A)  are the same as taxes. 
B)  did not exist. 
C)  are the opposite of taxes. 
D)  were a constant amount. 
A)  are the same as taxes. 
B)  did not exist. 
C)  are the opposite of taxes. 
D)  were a constant amount.

Question 12

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 13

Income taxes and transfer payments help prevent extreme macroeconomic fluctuations.

Accepted Answer

A) True 
 B)False

Question 14

____ 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

Question 15

During the debate on the stimulus package in 2009 and 2010,Republicans argued in favor of increased government spending as opposed to tax cuts based in part on the impact government spending would have on aggregate supply.

Accepted Answer

A) True 
 B)False

Question 16

Figure 11-3
  
-In Figure 11-3,which line represents the change in the consumption schedule caused by an increase in the personal income tax?

Accepted Answer

A)  C1 in graph (a) 
B)  C2 in graph (a) 
C)  C1 in graph (b) 
D)  C2 in graph (b) 
A)  C1 in graph (a) 
B)  C2 in graph (a) 
C)  C1 in graph (b) 
D)  C2 in graph (b)

Question 17

Table 11-1
  
-Refer to Table 11-1.What is the level of consumption in this model?

Accepted Answer

A)  2,950 
B)  2,750 
C)  2,550 
D)  2,350 
E)  2,150 
A)  2,950 
B)  2,750 
C)  2,550 
D)  2,350 
E)  2,150

Question 18

Government spending influences spending indirectly.

Accepted Answer

A) True 
 B)False

Question 19

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 20

If the demand-side effects of supply-side tax cuts are greater than the supply-side effects,then we can expect the result to be a(n)

Accepted Answer

A)  decrease in output and prices. 
B)  decrease in output and an increase in prices. 
C)  increase in output and prices. 
D)  increase in output and a decrease in prices. 
A)  decrease in output and prices. 
B)  decrease in output and an increase in prices. 
C)  increase in output and prices. 
D)  increase in output and a decrease in prices.

Conservatives usually favor increasing government spending to increase aggregate demand.

How does an increase in taxes affect the expenditure schedule?

One of the practical issues in the choice of government spending or taxes to change aggregate demand is how large a

If personal income tax rates are decreased in an attempt to stimulate spending,we should expect to see

If all variable taxes in the United States were removed and only fixed taxes remained,what would be the effect on the expenditures schedule?

Figure 11-2 -Which graph in Figure 11-2 best reflects a Keynesian's view of the impact of raising taxes on saving?

If income tax rates are increased in an attempt to balance the federal budget,we should expect to see

Changes in government spending

Figure 11-3 -In Figure 11-3,which line represents the change in the consumption schedule caused by an increase in the residential property tax?

Table 11-1 -Refer to Table 11-1.What is the equilibrium level of income in this model?

In the determination of disposable income,transfer payments are treated as if they

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

Income taxes and transfer payments help prevent extreme macroeconomic fluctuations.

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

During the debate on the stimulus package in 2009 and 2010,Republicans argued in favor of increased government spending as opposed to tax cuts based in part on the impact government spending would have on aggregate supply.

Figure 11-3 -In Figure 11-3,which line represents the change in the consumption schedule caused by an increase in the personal income tax?

Table 11-1 -Refer to Table 11-1.What is the level of consumption in this model?

Government spending influences spending indirectly.

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.

If the demand-side effects of supply-side tax cuts are greater than the supply-side effects,then we can expect the result to be a(n)

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

Conservatives usually favor increasing government spending to increase aggregate demand.

How does an increase in taxes affect the expenditure schedule?

One of the practical issues in the choice of government spending or taxes to change aggregate demand is how large a

If personal income tax rates are decreased in an attempt to stimulate spending,we should expect to see

If all variable taxes in the United States were removed and only fixed taxes remained,what would be the effect on the expenditures schedule?

Figure 11-2 -Which graph in Figure 11-2 best reflects a Keynesian's view of the impact of raising taxes on saving?

If income tax rates are increased in an attempt to balance the federal budget,we should expect to see

Changes in government spending

Figure 11-3 -In Figure 11-3,which line represents the change in the consumption schedule caused by an increase in the residential property tax?

Table 11-1 -Refer to Table 11-1.What is the equilibrium level of income in this model?

In the determination of disposable income,transfer payments are treated as if they

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

Income taxes and transfer payments help prevent extreme macroeconomic fluctuations.

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

During the debate on the stimulus package in 2009 and 2010,Republicans argued in favor of increased government spending as opposed to tax cuts based in part on the impact government spending would have on aggregate supply.

Figure 11-3 -In Figure 11-3,which line represents the change in the consumption schedule caused by an increase in the personal income tax?

Table 11-1 -Refer to Table 11-1.What is the level of consumption in this model?

Government spending influences spending indirectly.

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.

If the demand-side effects of supply-side tax cuts are greater than the supply-side effects,then we can expect the result to be a(n)

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