Question 1

The three categories of federal government expenditures,in addition to government purchases,are

Accepted Answer

A) interest on the national debt,grants to state and local governments,and transfer payments. 
B) interest on the national debt,defense spending,and transfer payments. 
C) defense spending,budgets of federal agencies,and transfer payments. 
D) defense spending,Social Security,and Medicare. 
A) interest on the national debt,grants to state and local governments,and transfer payments. 
B) interest on the national debt,defense spending,and transfer payments. 
C) defense spending,budgets of federal agencies,and transfer payments. 
D) defense spending,Social Security,and Medicare. A

Question 2

Figure 16-2  
-Refer to Figure 16-2.In the graph above,if the economy is at point A,an appropriate fiscal policy by Congress and the president would be to

Accepted Answer

A) decrease the required reserve ratio. 
B) sell government securities. 
C) increase government expenditures. 
D) decrease transfer payments. 
A) decrease the required reserve ratio. 
B) sell government securities. 
C) increase government expenditures. 
D) decrease transfer payments. C

Question 3

The cyclically adjusted budget deficit calculates the budget surplus or deficit at

Accepted Answer

A) real GDP. 
B) potential GDP. 
C) nominal GDP. 
D) average GDP. 
A) real GDP. 
B) potential GDP. 
C) nominal GDP. 
D) average GDP. B

Question 4

Accumulating debt poses a problem for the U.S.federal government because

Accepted Answer

A) it is currently in danger of defaulting on the debt. 
B) a large debt-to-GDP ratio causes crowding out. 
C) building roads and bridges do not yield enough benefits to justify their cost. 
D) the debt has to ultimately be paid off. 
A) it is currently in danger of defaulting on the debt. 
B) a large debt-to-GDP ratio causes crowding out. 
C) building roads and bridges do not yield enough benefits to justify their cost. 
D) the debt has to ultimately be paid off.

Question 5

The fastest growing category of government expenditure is

Accepted Answer

A) grants to state and local governments. 
B) defense spending. 
C) transfer payments. 
D) government purchases. 
A) grants to state and local governments. 
B) defense spending. 
C) transfer payments. 
D) government purchases.

Question 6

Expansionary fiscal policy involves increasing government purchases or increasing taxes.

Accepted Answer

A) True 
 B)False

Question 7

Since the Social Security system began in 1935,the number of workers per retiree has

Accepted Answer

A) stayed roughly the same. 
B) continually risen. 
C) continually declined. 
D) risen and declined with different generations. 
A) stayed roughly the same. 
B) continually risen. 
C) continually declined. 
D) risen and declined with different generations.

Question 8

Figure 16-2  
-Refer to Figure 16-2.In the graph above,if the economy is at point A,an appropriate fiscal policy by Congress and the president would be to

Accepted Answer

A) lower the discount rate of interest. 
B) execute an open market sale of government securities. 
C) increase government transfer payments. 
D) increase marginal income tax rates. 
A) lower the discount rate of interest. 
B) execute an open market sale of government securities. 
C) increase government transfer payments. 
D) increase marginal income tax rates.

Question 9

Tax increases on business income decrease aggregate demand by decreasing

Accepted Answer

A) business investment spending. 
B) consumption spending. 
C) government spending. 
D) wage rates. 
A) business investment spending. 
B) consumption spending. 
C) government spending. 
D) wage rates.

Question 10

Crowding out will be greater

Accepted Answer

A) the less sensitive consumption spending is to changes in the interest rate. 
B) the further equilibrium GDP is below potential GDP. 
C) the more sensitive investment spending is to changes in the interest rate. 
D) if the economy is in recession,rather than at full employment. 
A) the less sensitive consumption spending is to changes in the interest rate. 
B) the further equilibrium GDP is below potential GDP. 
C) the more sensitive investment spending is to changes in the interest rate. 
D) if the economy is in recession,rather than at full employment.

Question 11

If government increases taxes by the same amount it increases government spending,there will be no effect on aggregate demand: the increase in government spending is offset by an equal decrease in consumption spending by households.

Accepted Answer

A) True 
 B)False

Question 12

If real GDP exceeded potential real GDP and inflation was increasing,which of the following would be an appropriate fiscal policy?

Accepted Answer

A) a decrease in the money supply and an increase in the interest rate 
B) an increase in government spending 
C) an increase in taxes 
D) an increase in oil prices 
A) a decrease in the money supply and an increase in the interest rate 
B) an increase in government spending 
C) an increase in taxes 
D) an increase in oil prices

Question 13

If Congress and the president pursue an expansionary fiscal policy at the same time as the Federal Reserve pursues an expansionary monetary policy,how might the expansionary monetary policy affect the extent of crowding out in the short run?

Accepted Answer

An expansionary fiscal policy will cause

Question 14

List the five categories of federal government expenditures.

Accepted Answer

1.Defense spending 2.Transfer

Question 15

The cyclically adjusted budget is calculated at potential GDP.

Accepted Answer

A) True 
 B)False

Question 16

Calculate the value of the government purchases multiplier if the marginal propensity to consume equals 0.8,the tax rate equals 0.2,and the marginal propensity to import equals 0.05.

Accepted Answer

Government purchases

Question 17

Suppose that the federal budget is balanced when GDP is at potential GDP.If equilibrium GDP falls below potential

Accepted Answer

A) this will result in a current budget deficit. 
B) the cyclically adjusted budget will be balanced. 
C) government transfer payments will be rising and tax receipts will be falling. 
D) All of the above are correct. 
A) this will result in a current budget deficit. 
B) the cyclically adjusted budget will be balanced. 
C) government transfer payments will be rising and tax receipts will be falling. 
D) All of the above are correct.

Question 18

Expansionary fiscal policy

Accepted Answer

A) can be effective in the short run. 
B) causes complete crowding out in the short run. 
C) is never effective because of crowding out. 
D) can be effective in the long run. 
A) can be effective in the short run. 
B) causes complete crowding out in the short run. 
C) is never effective because of crowding out. 
D) can be effective in the long run.

Question 19

As a percentage of GDP,federal expenditures ________ from 1992 to 2001,________ from 2001 to 2011,and have ________ since 2011.

Accepted Answer

A) rose; fell; risen 
B) fell; fell; risen 
C) rose; rose; fallen 
D) fell; rose; fallen 
A) rose; fell; risen 
B) fell; fell; risen 
C) rose; rose; fallen 
D) fell; rose; fallen

Question 20

The total value of U.S.Treasury bonds outstanding is called the federal government debt.

Accepted Answer

A) True 
 B)False

The three categories of federal government expenditures,in addition to government purchases,are

Figure 16-2 -Refer to Figure 16-2.In the graph above,if the economy is at point A,an appropriate fiscal policy by Congress and the president would be to

The cyclically adjusted budget deficit calculates the budget surplus or deficit at

Accumulating debt poses a problem for the U.S.federal government because

The fastest growing category of government expenditure is

Expansionary fiscal policy involves increasing government purchases or increasing taxes.

Since the Social Security system began in 1935,the number of workers per retiree has

Figure 16-2 -Refer to Figure 16-2.In the graph above,if the economy is at point A,an appropriate fiscal policy by Congress and the president would be to

Tax increases on business income decrease aggregate demand by decreasing

Crowding out will be greater

If government increases taxes by the same amount it increases government spending,there will be no effect on aggregate demand: the increase in government spending is offset by an equal decrease in consumption spending by households.

If real GDP exceeded potential real GDP and inflation was increasing,which of the following would be an appropriate fiscal policy?

If Congress and the president pursue an expansionary fiscal policy at the same time as the Federal Reserve pursues an expansionary monetary policy,how might the expansionary monetary policy affect the extent of crowding out in the short run?

List the five categories of federal government expenditures.

The cyclically adjusted budget is calculated at potential GDP.

Calculate the value of the government purchases multiplier if the marginal propensity to consume equals 0.8,the tax rate equals 0.2,and the marginal propensity to import equals 0.05.

Suppose that the federal budget is balanced when GDP is at potential GDP.If equilibrium GDP falls below potential

Expansionary fiscal policy

As a percentage of GDP,federal expenditures from 1992 to 2001, from 2001 to 2011,and have since 2011.

The total value of U.S.Treasury bonds outstanding is called the federal government debt.

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Exam 16: Fiscal Policy

The three categories of federal government expenditures,in addition to government purchases,are

Figure 16-2 -Refer to Figure 16-2.In the graph above,if the economy is at point A,an appropriate fiscal policy by Congress and the president would be to

The cyclically adjusted budget deficit calculates the budget surplus or deficit at

Accumulating debt poses a problem for the U.S.federal government because

The fastest growing category of government expenditure is

Expansionary fiscal policy involves increasing government purchases or increasing taxes.

Since the Social Security system began in 1935,the number of workers per retiree has

Figure 16-2 -Refer to Figure 16-2.In the graph above,if the economy is at point A,an appropriate fiscal policy by Congress and the president would be to

Tax increases on business income decrease aggregate demand by decreasing

Crowding out will be greater

If government increases taxes by the same amount it increases government spending,there will be no effect on aggregate demand: the increase in government spending is offset by an equal decrease in consumption spending by households.

If real GDP exceeded potential real GDP and inflation was increasing,which of the following would be an appropriate fiscal policy?

If Congress and the president pursue an expansionary fiscal policy at the same time as the Federal Reserve pursues an expansionary monetary policy,how might the expansionary monetary policy affect the extent of crowding out in the short run?

List the five categories of federal government expenditures.

The cyclically adjusted budget is calculated at potential GDP.

Calculate the value of the government purchases multiplier if the marginal propensity to consume equals 0.8,the tax rate equals 0.2,and the marginal propensity to import equals 0.05.

Suppose that the federal budget is balanced when GDP is at potential GDP.If equilibrium GDP falls below potential

Expansionary fiscal policy

As a percentage of GDP,federal expenditures ________ from 1992 to 2001,________ from 2001 to 2011,and have ________ since 2011.

The total value of U.S.Treasury bonds outstanding is called the federal government debt.

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

As a percentage of GDP,federal expenditures from 1992 to 2001, from 2001 to 2011,and have since 2011.