Question 1

The government funds its spending by taxation and borrowing.

Accepted Answer

A) True 
 B)False  True

Question 2

What is the largest tax in the United States?

Accepted Answer

The largest tax in the United States is the federal income tax.Since the late 1960s,the federal income tax has been between 6 and 10 percent of GDP,and it is currently in the low end of that range.

Question 3

During a recession,the budget deficit generally increases because tax revenues weaken while expenditures rise.This increase is known as the

Accepted Answer

A)  automatic stabilizer. 
B)  net stimulus increase. 
C)  automatic increase. 
D)  fiscal stabilizer. 
A)  automatic stabilizer. 
B)  net stimulus increase. 
C)  automatic increase. 
D)  fiscal stabilizer. A

Question 4

An increase in government spending is more likely to lead to higher inflation when

Accepted Answer

A)  the unemployment rate is above the natural rate. 
B)  real GDP is above potential GDP. 
C)  the business cycle is near the trough. 
D)  the economy is in a recession. 
A)  the unemployment rate is above the natural rate. 
B)  real GDP is above potential GDP. 
C)  the business cycle is near the trough. 
D)  the economy is in a recession.

Question 5

The excess of the federal government's spending over its revenues is called the

Accepted Answer

A)  surplus deficit. 
B)  budget deficit. 
C)  surplus effect. 
D)  budget surplus. 
A)  surplus deficit. 
B)  budget deficit. 
C)  surplus effect. 
D)  budget surplus.

Question 6

The multiplier effect can be expressed as both a job multiplier and a spending multiplier.

Accepted Answer

A) True 
 B)False

Question 7

The marginal propensity to consume is the portion of income that a household saves after taxes.

Accepted Answer

A) True 
 B)False

Question 8

An excise tax taxes individual income.

Accepted Answer

A) True 
 B)False

Question 9

During a recession,government spending to push up output and reduce unemployment is called

Accepted Answer

A)  inflationary. 
B)  stimulative. 
C)  deflationary. 
D)  a fiscal devaluation. 
A)  inflationary. 
B)  stimulative. 
C)  deflationary. 
D)  a fiscal devaluation.

Question 10

As overseas leakage becomes greater,the multiplier effect

Accepted Answer

A)  grows. 
B)  shrinks. 
C)  becomes more moderate. 
D)  is replaced with the incentive effect. 
A)  grows. 
B)  shrinks. 
C)  becomes more moderate. 
D)  is replaced with the incentive effect.

Question 11

Fiscal stimulus involves raising taxes and reducing spending to stimulate the economy.

Accepted Answer

A) True 
 B)False

Question 12

The short-term impact of government spending on demand schedules for goods and labor is

Accepted Answer

A)  a shift to the left. 
B)  a decrease in inflation. 
C)  a shift to the right. 
D)  an increase in inflation. 
A)  a shift to the left. 
B)  a decrease in inflation. 
C)  a shift to the right. 
D)  an increase in inflation.

Question 13

An attempt to use government spending to boost the economy may bring

Accepted Answer

A)  inflation. 
B)  deflation. 
C)  anarchy. 
D)  fiscal instability. 
A)  inflation. 
B)  deflation. 
C)  anarchy. 
D)  fiscal instability.

Question 14

The effect of crowding out over the long run is

Accepted Answer

A)  bad because businesses have less access to loans they need to buy capital. 
B)  good because it ensures strong businesses. 
C)  bad because it is deflationary in nature. 
D)  good because it tends to reduce taxes. 
A)  bad because businesses have less access to loans they need to buy capital. 
B)  good because it ensures strong businesses. 
C)  bad because it is deflationary in nature. 
D)  good because it tends to reduce taxes.

Question 15

The tax you pay on your last dollar of income is called the

Accepted Answer

A)  last dollar tax. 
B)  average tax rate. 
C)  marginal rate of payment. 
D)  marginal tax rate. 
A)  last dollar tax. 
B)  average tax rate. 
C)  marginal rate of payment. 
D)  marginal tax rate.

Question 16

The amount of income people have left after taxes is called

Accepted Answer

A)  boot. 
B)  net profit. 
C)  excise income. 
D)  disposable income. 
A)  boot. 
B)  net profit. 
C)  excise income. 
D)  disposable income.

Question 17

In the short term,an increase in government spending may

Accepted Answer

A)  reduce taxes and wages. 
B)  raise prices and wages. 
C)  raise taxes but reduce wages. 
D)  raise wages and reduce inflation. 
A)  reduce taxes and wages. 
B)  raise prices and wages. 
C)  raise taxes but reduce wages. 
D)  raise wages and reduce inflation.

Question 18

The total of all past government borrowing,minus government budget surpluses,is called the

Accepted Answer

A)  national cost. 
B)  public debt. 
C)  net debt load. 
D)  fiscal cost. 
A)  national cost. 
B)  public debt. 
C)  net debt load. 
D)  fiscal cost.

Question 19

The Keynesian recommendation for a policy response to a recession consists of

Accepted Answer

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

Question 20

An increase in government spending in the short term lowers unemployment and increases the GDP.

Accepted Answer

A) True 
 B)False

The government funds its spending by taxation and borrowing.

What is the largest tax in the United States?

During a recession,the budget deficit generally increases because tax revenues weaken while expenditures rise.This increase is known as the

An increase in government spending is more likely to lead to higher inflation when

The excess of the federal government's spending over its revenues is called the

The multiplier effect can be expressed as both a job multiplier and a spending multiplier.

The marginal propensity to consume is the portion of income that a household saves after taxes.

An excise tax taxes individual income.

During a recession,government spending to push up output and reduce unemployment is called

As overseas leakage becomes greater,the multiplier effect

Fiscal stimulus involves raising taxes and reducing spending to stimulate the economy.

The short-term impact of government spending on demand schedules for goods and labor is

An attempt to use government spending to boost the economy may bring

The effect of crowding out over the long run is

The tax you pay on your last dollar of income is called the

The amount of income people have left after taxes is called

In the short term,an increase in government spending may

The total of all past government borrowing,minus government budget surpluses,is called the

The Keynesian recommendation for a policy response to a recession consists of

An increase in government spending in the short term lowers unemployment and increases the GDP.

Introduction

Demand and Supply: The Basics of the Market Economy

Market Equilibrium and Shifts

How Businesses Work

Competition and Market Power

Government and the Economy

The First Step Into Macroeconomics

Inflation

Growth

Business Cycles, unemployment and Inflation

Monetary Policy

The Financial Markets

International Trade

Technological Change

Economics of the Labor Market

The Distribution of Income

Economics of Retirement and Healthcare

Economics of Energy, the Environment, and Global Climate Change Glossary

Filters

Exam 11: Fiscal Policy

The government funds its spending by taxation and borrowing.

What is the largest tax in the United States?

During a recession,the budget deficit generally increases because tax revenues weaken while expenditures rise.This increase is known as the

An increase in government spending is more likely to lead to higher inflation when

The excess of the federal government's spending over its revenues is called the

The multiplier effect can be expressed as both a job multiplier and a spending multiplier.

The marginal propensity to consume is the portion of income that a household saves after taxes.

An excise tax taxes individual income.

During a recession,government spending to push up output and reduce unemployment is called

As overseas leakage becomes greater,the multiplier effect

Fiscal stimulus involves raising taxes and reducing spending to stimulate the economy.

The short-term impact of government spending on demand schedules for goods and labor is

An attempt to use government spending to boost the economy may bring

The effect of crowding out over the long run is

The tax you pay on your last dollar of income is called the

The amount of income people have left after taxes is called

In the short term,an increase in government spending may

The total of all past government borrowing,minus government budget surpluses,is called the

The Keynesian recommendation for a policy response to a recession consists of

An increase in government spending in the short term lowers unemployment and increases the GDP.

Introduction

Demand and Supply: The Basics of the Market Economy

Market Equilibrium and Shifts

How Businesses Work

Competition and Market Power

Government and the Economy

The First Step Into Macroeconomics

Inflation

Growth

Business Cycles, unemployment and Inflation

Monetary Policy

The Financial Markets

International Trade

Technological Change

Economics of the Labor Market

The Distribution of Income

Economics of Retirement and Healthcare

Economics of Energy, the Environment, and Global Climate Change Glossary

Filters