Question 1

Which of the following is an example of fiscal policy?

Accepted Answer

A)  The Federal Reserve cuts interest rates sharply in 2007. 
B)  The use of wage and price controls to curb inflation. 
C)  The Deficit Reduction Act of 1984. 
D)  Family Leave Act of 1993. 
A)  The Federal Reserve cuts interest rates sharply in 2007. 
B)  The use of wage and price controls to curb inflation. 
C)  The Deficit Reduction Act of 1984. 
D)  Family Leave Act of 1993.

Question 2

Which of the following supports the argument for hands-off policy?

Accepted Answer

A)  Fiscal policy does not impact the economy. 
B)  Fine-tuning is not compatible with our design capabilities. 
C)  Monetary policy does not impact the economy. 
D)  The economy has been fairly stable since World War II. 
A)  Fiscal policy does not impact the economy. 
B)  Fine-tuning is not compatible with our design capabilities. 
C)  Monetary policy does not impact the economy. 
D)  The economy has been fairly stable since World War II.

Question 3

A supply-side policy cure for inflation includes:

Accepted Answer

A)  Reduced government spending. 
B)  Tax incentives to encourage saving. 
C)  The purchase of securities by the Fed. 
D)  An increase in the discount rate. 
A)  Reduced government spending. 
B)  Tax incentives to encourage saving. 
C)  The purchase of securities by the Fed. 
D)  An increase in the discount rate.

Question 4

"Fine-tuning" the economy is a generally accepted approach to macro policy since time lags in policy implementation is not an issue.

Accepted Answer

A) True 
 B)False

Question 5

Tax cuts designed to stimulate work effort,saving,and investments are an example of supply-side policy.

Accepted Answer

A) True 
 B)False

Question 6

The Personal Responsibility and Work Opportunity Act of 1996 established time limits for welfare dependence and caused aggregate:

Accepted Answer

A)  Demand to shift to the right. 
B)  Demand to shift to the left. 
C)  Supply to shift to the right. 
D)  Supply to shift to the left. 
A)  Demand to shift to the right. 
B)  Demand to shift to the left. 
C)  Supply to shift to the right. 
D)  Supply to shift to the left.

Question 7

If legislators cannot agree about how to address an economic situation,this is an example of a measurement problem.

Accepted Answer

A) True 
 B)False

Question 8

The correction of any and all macroeconomic problems that arise:

Accepted Answer

A)  Is compatible with our design capabilities. 
B)  Has been easy to accomplish over the last decade. 
C)  Is the concept of fine-tuning. 
D)  Can only be achieved using monetary policy. 
A)  Is compatible with our design capabilities. 
B)  Has been easy to accomplish over the last decade. 
C)  Is the concept of fine-tuning. 
D)  Can only be achieved using monetary policy.

Question 9

Refer to Figure 16.1.  
-Refer to Figure 16.1.If the economy is initially in equilibrium at P3 and Q2,the appropriate policy to move the economy to an equilibrium at P2 and Q3 would be to reduce:

Accepted Answer

A)  Increase immigration barriers. 
B)  Increase the marginal tax rate. 
C)  Increase government spending. 
D)  Reduce government regulation. 
A)  Increase immigration barriers. 
B)  Increase the marginal tax rate. 
C)  Increase government spending. 
D)  Reduce government regulation.

Question 10

Assume the economy is in a recession and has a budget deficit.Ceteris paribus,if the economy begins to expand,automatic stabilizers will cause:

Accepted Answer

A)  A decrease in tax revenues. 
B)  An increase in government spending. 
C)  A decrease in the budget deficit. 
D)  A decrease in interest rates. 
A)  A decrease in tax revenues. 
B)  An increase in government spending. 
C)  A decrease in the budget deficit. 
D)  A decrease in interest rates.

Question 11

During a recession,Keynesians are in favor of tax cuts or spending increases to stimulate the economy and start the multiplier process.

Accepted Answer

A) True 
 B)False

Question 12

The tools of fiscal policy are contained within the federal budget.

Accepted Answer

A) True 
 B)False

Question 13

Supply-side policy tools to deal with stagflation include:

Accepted Answer

A)  A reduction in government spending. 
B)  A decrease in the discount rate. 
C)  A reduction in tax rates. 
D)  An increase in the reserve requirement. 
A)  A reduction in government spending. 
B)  A decrease in the discount rate. 
C)  A reduction in tax rates. 
D)  An increase in the reserve requirement.

Question 14

The uncertainty of how consumers will respond to a tax cut contributes to:

Accepted Answer

A)  Goal conflicts. 
B)  Design problems. 
C)  Measurement problems. 
D)  Implementation problems. 
A)  Goal conflicts. 
B)  Design problems. 
C)  Measurement problems. 
D)  Implementation problems.

Question 15

Refer to Figure 16.2.  
-In Figure 16.2,a shift from AS2 to AS3 is most likely to result from:

Accepted Answer

A)  An increase in government spending. 
B)  An increase in government regulation. 
C)  A decrease in the reserve requirement. 
D)  An increase in the investment in human capital. 
A)  An increase in government spending. 
B)  An increase in government regulation. 
C)  A decrease in the reserve requirement. 
D)  An increase in the investment in human capital.

Question 16

When does the fiscal year begin for the federal government?

Accepted Answer

A)  January 1. 
B)  July 1. 
C)  October 1. 
D)  December 31. 
A)  January 1. 
B)  July 1. 
C)  October 1. 
D)  December 31.

Question 17

Stagflation is a situation in which the economy experiences both:

Accepted Answer

A)  Inflation and unemployment. 
B)  Inflation and full employment. 
C)  Deflation and unemployment. 
D)  Deflation and full employment. 
A)  Inflation and unemployment. 
B)  Inflation and full employment. 
C)  Deflation and unemployment. 
D)  Deflation and full employment.

Question 18

Many economists argue that government price indexes overstate inflation by 1 to 2 percent.From the point of view of those designing economic policy,this is an example of:

Accepted Answer

A)  A goal conflict. 
B)  A measurement problem. 
C)  A design problem. 
D)  An implementation problem. 
A)  A goal conflict. 
B)  A measurement problem. 
C)  A design problem. 
D)  An implementation problem.

Question 19

Table 16.1 - Obstacles to the success of economic policy   
-Democratic presidents often begin their terms by stimulating the economy,while Republican presidents begin by restraining inflation.(Choose from Table 16.1)

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 20

Automatic stabilizers include:

Accepted Answer

A)  Unemployment benefits. 
B)  Open market operations. 
C)  Government deregulation. 
D)  Reserve requirements. 
A)  Unemployment benefits. 
B)  Open market operations. 
C)  Government deregulation. 
D)  Reserve requirements.

Which of the following is an example of fiscal policy?

Which of the following supports the argument for hands-off policy?

A supply-side policy cure for inflation includes:

"Fine-tuning" the economy is a generally accepted approach to macro policy since time lags in policy implementation is not an issue.

Tax cuts designed to stimulate work effort,saving,and investments are an example of supply-side policy.

The Personal Responsibility and Work Opportunity Act of 1996 established time limits for welfare dependence and caused aggregate:

If legislators cannot agree about how to address an economic situation,this is an example of a measurement problem.

The correction of any and all macroeconomic problems that arise:

Refer to Figure 16.1. -Refer to Figure 16.1.If the economy is initially in equilibrium at P₃ and Q₂,the appropriate policy to move the economy to an equilibrium at P₂ and Q₃ would be to reduce:

Assume the economy is in a recession and has a budget deficit.Ceteris paribus,if the economy begins to expand,automatic stabilizers will cause:

During a recession,Keynesians are in favor of tax cuts or spending increases to stimulate the economy and start the multiplier process.

The tools of fiscal policy are contained within the federal budget.

Supply-side policy tools to deal with stagflation include:

The uncertainty of how consumers will respond to a tax cut contributes to:

Refer to Figure 16.2. -In Figure 16.2,a shift from AS₂ to AS₃ is most likely to result from:

When does the fiscal year begin for the federal government?

Stagflation is a situation in which the economy experiences both:

Many economists argue that government price indexes overstate inflation by 1 to 2 percent.From the point of view of those designing economic policy,this is an example of:

Table 16.1 - Obstacles to the success of economic policy -Democratic presidents often begin their terms by stimulating the economy,while Republican presidents begin by restraining inflation.(Choose from Table 16.1)

Automatic stabilizers include:

The Challenge of Economics

The US Economy

Supply and Demand

Consumer Demand

Supply Decisions

Competition

Monopoly

The Labor Market

Government Intervention

The Business Cycle

Aggregate Supply and Demand

Fiscal Policy

Money and Banks

Monetary Policy

Economic Growth

International Trade

Filters

Exam 16: Theory and Reality

Which of the following is an example of fiscal policy?

Which of the following supports the argument for hands-off policy?

A supply-side policy cure for inflation includes:

"Fine-tuning" the economy is a generally accepted approach to macro policy since time lags in policy implementation is not an issue.

Tax cuts designed to stimulate work effort,saving,and investments are an example of supply-side policy.

The Personal Responsibility and Work Opportunity Act of 1996 established time limits for welfare dependence and caused aggregate:

If legislators cannot agree about how to address an economic situation,this is an example of a measurement problem.

The correction of any and all macroeconomic problems that arise:

Refer to Figure 16.1. -Refer to Figure 16.1.If the economy is initially in equilibrium at P3 and Q2,the appropriate policy to move the economy to an equilibrium at P2 and Q3 would be to reduce:

Assume the economy is in a recession and has a budget deficit.Ceteris paribus,if the economy begins to expand,automatic stabilizers will cause:

During a recession,Keynesians are in favor of tax cuts or spending increases to stimulate the economy and start the multiplier process.

The tools of fiscal policy are contained within the federal budget.

Supply-side policy tools to deal with stagflation include:

The uncertainty of how consumers will respond to a tax cut contributes to:

Refer to Figure 16.2. -In Figure 16.2,a shift from AS2 to AS3 is most likely to result from:

When does the fiscal year begin for the federal government?

Stagflation is a situation in which the economy experiences both:

Many economists argue that government price indexes overstate inflation by 1 to 2 percent.From the point of view of those designing economic policy,this is an example of:

Table 16.1 - Obstacles to the success of economic policy -Democratic presidents often begin their terms by stimulating the economy,while Republican presidents begin by restraining inflation.(Choose from Table 16.1)

Automatic stabilizers include:

The Challenge of Economics

The US Economy

Supply and Demand

Consumer Demand

Supply Decisions

Competition

Monopoly

The Labor Market

Government Intervention

The Business Cycle

Aggregate Supply and Demand

Fiscal Policy

Money and Banks

Monetary Policy

Economic Growth

International Trade

Filters

Refer to Figure 16.1. -Refer to Figure 16.1.If the economy is initially in equilibrium at P₃ and Q₂,the appropriate policy to move the economy to an equilibrium at P₂ and Q₃ would be to reduce:

Refer to Figure 16.2. -In Figure 16.2,a shift from AS₂ to AS₃ is most likely to result from: