Question 1

In 2010,federal,state,and local governments spent an estimated

Accepted Answer

A)  $5.5 trillion. 
B)  $3.5 billion. 
C)  $2.8 trillion. 
D)  $550 billion. 
A)  $5.5 trillion. 
B)  $3.5 billion. 
C)  $2.8 trillion. 
D)  $550 billion.

Question 2

The overall increase in GDP that results from a $1 cut in taxes is called

Accepted Answer

A)  The government spending effect. 
B)  The tax multiplier. 
C)  The fiscal multiplier. 
D)  The base multiplier. 
A)  The government spending effect. 
B)  The tax multiplier. 
C)  The fiscal multiplier. 
D)  The base multiplier.

Question 3

What is the definition and purpose of the payroll tax?

Accepted Answer

The payroll tax is a tax paid by both em

Question 4

The federal government's budget deficit __________ between 2008 and 2009.

Accepted Answer

A)  decreased from $1,413 billion to $459 billion 
B)  remained stable at $459 billion 
C)  increased from $459 billion to $1,413 billion 
D)  increased by $1,413 billion 
A)  decreased from $1,413 billion to $459 billion 
B)  remained stable at $459 billion 
C)  increased from $459 billion to $1,413 billion 
D)  increased by $1,413 billion

Question 5

The time it takes to recognize a recession and implement a spending stimulus is called a

Accepted Answer

A)  retroactivity. 
B)  fiscal drag. 
C)  multiplier. 
D)  lag. 
A)  retroactivity. 
B)  fiscal drag. 
C)  multiplier. 
D)  lag.

Question 6

The single biggest federal tax is the

Accepted Answer

A)  excise tax. 
B)  federal income tax. 
C)  estate tax. 
D)  corporate income tax. 
A)  excise tax. 
B)  federal income tax. 
C)  estate tax. 
D)  corporate income tax.

Question 7

In the short term,a decrease in taxes will have what effect on GDP and unemployment?

Accepted Answer

A)  It will reduce unemployment and reduce GDP. 
B)  It will reduce unemployment and raise GDP. 
C)  It will raise unemployment and raise GDP. 
D)  It will raise unemployment and reduce GDP. 
A)  It will reduce unemployment and reduce GDP. 
B)  It will reduce unemployment and raise GDP. 
C)  It will raise unemployment and raise GDP. 
D)  It will raise unemployment and reduce GDP.

Question 8

The wealthy have a(n)___________ marginal propensity to consume.

Accepted Answer

A)  lower 
B)  higher 
C)  elastic 
D)  inelastic 
A)  lower 
B)  higher 
C)  elastic 
D)  inelastic

Question 9

Some economists argue that the spending multiplier is actually less than 1.If the spending multiplier is 0.8,then a $200 billion increase in government spending will increase GDP by

Accepted Answer

A)  $200 billion. 
B)  $160 billion. 
C)  $40 billion. 
D)  $250 billion. 
A)  $200 billion. 
B)  $160 billion. 
C)  $40 billion. 
D)  $250 billion.

Question 10

The higher the marginal propensity to consume,

Accepted Answer

A)  the bigger the multiplier effect will be. 
B)  the smaller the spending effect will be. 
C)  the bigger the incentive effect will be. 
D)  the smaller the incentive effect will be. 
A)  the bigger the multiplier effect will be. 
B)  the smaller the spending effect will be. 
C)  the bigger the incentive effect will be. 
D)  the smaller the incentive effect will be.

Question 11

A result of budget deficits is that governments have to borrow more,sometimes resulting in

Accepted Answer

A)  increasing the rate of inflation. 
B)  decreasing interest rates. 
C)  increased foreign borrowing. 
D)  crowding out of the private sector from the market for loans. 
A)  increasing the rate of inflation. 
B)  decreasing interest rates. 
C)  increased foreign borrowing. 
D)  crowding out of the private sector from the market for loans.

Question 12

In the private sector,all transactions are voluntary,so

Accepted Answer

A)  there are always winners and losers. 
B)  often too few transactions will take place. 
C)  presumably all parties benefit. 
D)  individuals are required to participate. 
A)  there are always winners and losers. 
B)  often too few transactions will take place. 
C)  presumably all parties benefit. 
D)  individuals are required to participate.

Question 13

If the spending multiplier is 1.2,then a $100 billion increase in government spending will increase GDP by

Accepted Answer

A)  $100 billion. 
B)  $120 billion. 
C)  $83.3 billion. 
D)  $20 billion. 
A)  $100 billion. 
B)  $120 billion. 
C)  $83.3 billion. 
D)  $20 billion.

Question 14

An increase in government spending can raise wages and prices in the short term.

Accepted Answer

A) True 
 B)False

Question 15

Like private borrowers,governments

Accepted Answer

A)  can raise taxes to pay off their debts. 
B)  do not, in the long run, have to pay back their debts. 
C)  regulate the industries through which they borrow. 
D)  have to pay interest on their debts. 
A)  can raise taxes to pay off their debts. 
B)  do not, in the long run, have to pay back their debts. 
C)  regulate the industries through which they borrow. 
D)  have to pay interest on their debts.

Question 16

Domestic fiscal stimulus is more likely to lead to __________ when production is outsourced.

Accepted Answer

A)  decreased imports 
B)  increased imports 
C)  decreased inflation 
D)  increased inflation 
A)  decreased imports 
B)  increased imports 
C)  decreased inflation 
D)  increased inflation

Question 17

The overall boost to economic activity that results from a government spending increase is called a(n)

Accepted Answer

A)  butterfly effect. 
B)  economic effect. 
C)  multiplier effect. 
D)  aggregate demand effect. 
A)  butterfly effect. 
B)  economic effect. 
C)  multiplier effect. 
D)  aggregate demand effect.

Question 18

Some economists argue that the spending multiplier is actually less than 1.If the spending multiplier is 0.8,then a $200 billion increase in government spending will cause private sector spending to

Accepted Answer

A)  rise by $160 billion. 
B)  rise by $40 billion. 
C)  fall by $40 billion. 
D)  fall by $160 billion. 
A)  rise by $160 billion. 
B)  rise by $40 billion. 
C)  fall by $40 billion. 
D)  fall by $160 billion.

Question 19

What does the government have to do when there is a budget deficit?

Accepted Answer

The government has to borrow money and/o

Question 20

Which recent president raised taxes when the income tax share of GDP was very low?

Accepted Answer

A)  Ronald Reagan. 
B)  Bill Clinton. 
C)  George W. Bush. 
D)  Barack Obama. 
A)  Ronald Reagan. 
B)  Bill Clinton. 
C)  George W. Bush. 
D)  Barack Obama.

In 2010,federal,state,and local governments spent an estimated

The overall increase in GDP that results from a $1 cut in taxes is called

What is the definition and purpose of the payroll tax?

The federal government's budget deficit __________ between 2008 and 2009.

The time it takes to recognize a recession and implement a spending stimulus is called a

The single biggest federal tax is the

In the short term,a decrease in taxes will have what effect on GDP and unemployment?

The wealthy have a(n)___________ marginal propensity to consume.

Some economists argue that the spending multiplier is actually less than 1.If the spending multiplier is 0.8,then a $200 billion increase in government spending will increase GDP by

The higher the marginal propensity to consume,

A result of budget deficits is that governments have to borrow more,sometimes resulting in

In the private sector,all transactions are voluntary,so

If the spending multiplier is 1.2,then a $100 billion increase in government spending will increase GDP by

An increase in government spending can raise wages and prices in the short term.

Like private borrowers,governments

Domestic fiscal stimulus is more likely to lead to __________ when production is outsourced.

The overall boost to economic activity that results from a government spending increase is called a(n)

Some economists argue that the spending multiplier is actually less than 1.If the spending multiplier is 0.8,then a $200 billion increase in government spending will cause private sector spending to

What does the government have to do when there is a budget deficit?

Which recent president raised taxes when the income tax share of GDP was very low?

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

In 2010,federal,state,and local governments spent an estimated

The overall increase in GDP that results from a $1 cut in taxes is called

What is the definition and purpose of the payroll tax?

The federal government's budget deficit __________ between 2008 and 2009.

The time it takes to recognize a recession and implement a spending stimulus is called a

The single biggest federal tax is the

In the short term,a decrease in taxes will have what effect on GDP and unemployment?

The wealthy have a(n)___________ marginal propensity to consume.

Some economists argue that the spending multiplier is actually less than 1.If the spending multiplier is 0.8,then a $200 billion increase in government spending will increase GDP by

The higher the marginal propensity to consume,

A result of budget deficits is that governments have to borrow more,sometimes resulting in

In the private sector,all transactions are voluntary,so

If the spending multiplier is 1.2,then a $100 billion increase in government spending will increase GDP by

An increase in government spending can raise wages and prices in the short term.

Like private borrowers,governments

Domestic fiscal stimulus is more likely to lead to __________ when production is outsourced.

The overall boost to economic activity that results from a government spending increase is called a(n)

Some economists argue that the spending multiplier is actually less than 1.If the spending multiplier is 0.8,then a $200 billion increase in government spending will cause private sector spending to

What does the government have to do when there is a budget deficit?

Which recent president raised taxes when the income tax share of GDP was very low?

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