Question 1

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 2

Supply-side tax cuts tend to benefit the rich because tax cuts

Accepted Answer

A)  on income tend to benefit high income earners more than low income earners. 
B)  on savings benefit high income earners who do most of the personal saving. 
C)  for capital formation tend to benefit those with the means to accumulate capital. 
D)  on capital gains tend to benefit those with larger financial assets. 
E)  All of the above are correct. 
A)  on income tend to benefit high income earners more than low income earners. 
B)  on savings benefit high income earners who do most of the personal saving. 
C)  for capital formation tend to benefit those with the means to accumulate capital. 
D)  on capital gains tend to benefit those with larger financial assets. 
E)  All of the above are correct.

Question 3

Which of the following will shift the aggregate demand curve outward?

Accepted Answer

A)  tax cuts and government spending cuts 
B)  tax increases and government spending increases 
C)  tax cuts and government spending increases 
A)  tax cuts and government spending cuts 
B)  tax increases and government spending increases 
C)  tax cuts and government spending increases

Question 4

Why is the personal income tax considered to be one of the main features of our modern economy that helps ensure against a repeat performance of the Great Depression?

Accepted Answer

Income tax is considered an automatic st

Question 5

Figure 11-3
  
-In Figure 11-3,which line represents the change in the consumption schedule caused by a cut in the personal income tax as advocated by President George W.Bush in 2001?

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 6

Supply-side tax cuts are more likely to have the intended beneficial effect on

Accepted Answer

A)  budget deficits. 
B)  consumer spending. 
C)  investment spending. 
D)  net exports. 
A)  budget deficits. 
B)  consumer spending. 
C)  investment spending. 
D)  net exports.

Question 7

Do policy makers know the exact value of the fiscal multiplier?

Accepted Answer

A)  No, economists have almost no idea of the value of fiscal multipliers. 
B)  No, they are not known with complete accuracy. 
C)  Yes, economists know the precise value of the multiplier. 
D)  Yes, although there is a very small range of uncertainty in the value. 
A)  No, economists have almost no idea of the value of fiscal multipliers. 
B)  No, they are not known with complete accuracy. 
C)  Yes, economists know the precise value of the multiplier. 
D)  Yes, although there is a very small range of uncertainty in the value.

Question 8

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 9

At any given price level,equilibrium GDP on the expenditure side occurs when ____.

Accepted Answer

A)  Y = C + I + G − (X − IM) 
B)  Y = C + I − G 
C)  Y = C + I + G + (X − IM) 
D)  Y = C + X + G + (X − IM) 
A)  Y = C + I + G − (X − IM) 
B)  Y = C + I − G 
C)  Y = C + I + G + (X − IM) 
D)  Y = C + X + G + (X − IM)

Question 10

During the 2008 presidential campaign,candidate Barack Obama argued in favor of repealing the majority of the Bush tax cuts in order to increase government revenue.

Accepted Answer

A) True 
 B)False

Question 11

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 12

Which of the following conclusions about supply-side tax initiatives is accepted by most economists?

Accepted Answer

A)  Supply-side tax cuts are likely to benefit the poor as much as the rich. 
B)  Supply-side tax cuts will almost certainly lead to smaller budget deficits. 
C)  Such tax cuts probably will increase aggregate supply quickly, but an increase in aggregate demand will come later. 
D)  Tax reductions aimed at stimulating business investment are likely to have a greater impact than tax reductions aimed at getting people to work longer hours or save more. 
A)  Supply-side tax cuts are likely to benefit the poor as much as the rich. 
B)  Supply-side tax cuts will almost certainly lead to smaller budget deficits. 
C)  Such tax cuts probably will increase aggregate supply quickly, but an increase in aggregate demand will come later. 
D)  Tax reductions aimed at stimulating business investment are likely to have a greater impact than tax reductions aimed at getting people to work longer hours or save more.

Question 13

In order to maintain a balanced budget,Congress has decided to cut taxes and government spending both by $25 billion.What will happen to GDP?

Accepted Answer

A)  It will increase. 
B)  It will remain the same. 
C)  It will decrease. 
D)  It's impossible to know without the multiplier. 
A)  It will increase. 
B)  It will remain the same. 
C)  It will decrease. 
D)  It's impossible to know without the multiplier.

Question 14

Tax cuts associated with supply-side economics often lead to increased

Accepted Answer

A)  federal budget surpluses. 
B)  federal budget deficits. 
C)  foreign trade surpluses. 
D)  government spending. 
A)  federal budget surpluses. 
B)  federal budget deficits. 
C)  foreign trade surpluses. 
D)  government spending.

Question 15

The addition of imports reduces the value of the multiplier.

Accepted Answer

A) True 
 B)False

Question 16

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 17

When income taxes are included in the basic macroeconomic model,the value of the

Accepted Answer

A)  inflationary effect is increased. 
B)  multiplier is increased. 
C)  multiplier is decreased. 
D)  expenditure function is increased. 
A)  inflationary effect is increased. 
B)  multiplier is increased. 
C)  multiplier is decreased. 
D)  expenditure function is increased.

Question 18

A "conservative" would most likely argue in favor of

Accepted Answer

A)  tax increases when fiscal stimulus is necessary, and spending cuts when fiscal restraint is necessary. 
B)  tax cuts when fiscal restraint is necessary, and spending cuts when fiscal stimulus is necessary. 
C)  tax cuts when fiscal stimulus is necessary, and spending cuts when fiscal restraint is necessary. 
D)  spending increases when fiscal expansion is necessary, and tax increases when fiscal stimulus is necessary. 
A)  tax increases when fiscal stimulus is necessary, and spending cuts when fiscal restraint is necessary. 
B)  tax cuts when fiscal restraint is necessary, and spending cuts when fiscal stimulus is necessary. 
C)  tax cuts when fiscal stimulus is necessary, and spending cuts when fiscal restraint is necessary. 
D)  spending increases when fiscal expansion is necessary, and tax increases when fiscal stimulus is necessary.

Question 19

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 20

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.

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

Supply-side tax cuts tend to benefit the rich because tax cuts

Which of the following will shift the aggregate demand curve outward?

Why is the personal income tax considered to be one of the main features of our modern economy that helps ensure against a repeat performance of the Great Depression?

Figure 11-3 -In Figure 11-3,which line represents the change in the consumption schedule caused by a cut in the personal income tax as advocated by President George W.Bush in 2001?

Supply-side tax cuts are more likely to have the intended beneficial effect on

Do policy makers know the exact value of the fiscal multiplier?

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

At any given price level,equilibrium GDP on the expenditure side occurs when ____.

During the 2008 presidential campaign,candidate Barack Obama argued in favor of repealing the majority of the Bush tax cuts in order to increase government revenue.

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

Which of the following conclusions about supply-side tax initiatives is accepted by most economists?

In order to maintain a balanced budget,Congress has decided to cut taxes and government spending both by $25 billion.What will happen to GDP?

Tax cuts associated with supply-side economics often lead to increased

The addition of imports reduces the value of the multiplier.

For liberals,the United States has a(n)

When income taxes are included in the basic macroeconomic model,the value of the

A "conservative" would most likely argue in favor of

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

Transfer payments are income that is

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

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Exam 11: Managing Aggregate Demand: Fiscal Policy

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

Supply-side tax cuts tend to benefit the rich because tax cuts

Which of the following will shift the aggregate demand curve outward?

Why is the personal income tax considered to be one of the main features of our modern economy that helps ensure against a repeat performance of the Great Depression?

Figure 11-3 -In Figure 11-3,which line represents the change in the consumption schedule caused by a cut in the personal income tax as advocated by President George W.Bush in 2001?

Supply-side tax cuts are more likely to have the intended beneficial effect on

Do policy makers know the exact value of the fiscal multiplier?

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

At any given price level,equilibrium GDP on the expenditure side occurs when ____.

During the 2008 presidential campaign,candidate Barack Obama argued in favor of repealing the majority of the Bush tax cuts in order to increase government revenue.

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

Which of the following conclusions about supply-side tax initiatives is accepted by most economists?

In order to maintain a balanced budget,Congress has decided to cut taxes and government spending both by $25 billion.What will happen to GDP?

Tax cuts associated with supply-side economics often lead to increased

The addition of imports reduces the value of the multiplier.

For liberals,the United States has a(n)

When income taxes are included in the basic macroeconomic model,the value of the

A "conservative" would most likely argue in favor of

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

Transfer payments are income that is

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