Question 1

Which of the following is an entitlement program?

Accepted Answer

A) Social Security 
B) Medicare 
C) Medicaid 
D) all of the above 
E) none of the above 
A) Social Security 
B) Medicare 
C) Medicaid 
D) all of the above 
E) none of the above

Question 2

In the medium run,a tax cut that causes an increase in the budget deficit will affect which of the following?

Accepted Answer

A) the level of output but not its composition 
B) both the level and composition of output 
C) only the composition of output 
D) only the price level 
E) none of the above 
A) the level of output but not its composition 
B) both the level and composition of output 
C) only the composition of output 
D) only the price level 
E) none of the above

Question 3

The deficit at natural level of output is called

Accepted Answer

A) full-employment deficit. 
B) mid-cycle deficit. 
C) structural deficit. 
D) cyclically adjusted deficit. 
E) all of the above 
A) full-employment deficit. 
B) mid-cycle deficit. 
C) structural deficit. 
D) cyclically adjusted deficit. 
E) all of the above

Question 4

Since the early 1980s,debt ratios for the OECD countries have

Accepted Answer

A) increased. 
B) remained constant. 
C) decreased slightly. 
D) decreased dramatically,and are now close to zero. 
E) become impossible to define. 
A) increased. 
B) remained constant. 
C) decreased slightly. 
D) decreased dramatically,and are now close to zero. 
E) become impossible to define.

Question 5

Siegnorage is equal to

Accepted Answer

A) the rate of inflation. 
B) one divided by the rate of inflation. 
C) real money balances. 
D) the percentage growth rate of nominal money. 
E) the percentage growth rate of nominal money times real money balances. 
A) the rate of inflation. 
B) one divided by the rate of inflation. 
C) real money balances. 
D) the percentage growth rate of nominal money. 
E) the percentage growth rate of nominal money times real money balances.

Question 6

Hyperinflation refers to inflation in excess of ________ per month,

Accepted Answer

A) 30% 
B) 10% 
C) 20% 
D) 25% 
A) 30% 
B) 10% 
C) 20% 
D) 25%

Question 7

Explain fiscal dominance.

Accepted Answer

Most of the time,fiscal and monetary pol

Question 8

Suppose the Ricardian Equivalence proposition holds (i.e.,it is correct).What does this imply about the ability of fiscal policy to affect GDP? Explain.

Accepted Answer

The Ricardian Equivalence proposition de

Question 9

What are the factors that will determine the size of some future required tax increase to pay off all debt?

Accepted Answer

The factors will include: the

Question 10

Which of the following represents debt monetization?

Accepted Answer

A) an increase in the budget deficit that is financed by money creation 
B) an increase in the budget deficit that is financed by foreigner investors' purchases of domestic bonds 
C) an increase in the budget deficit that coincides with a central bank sale of bonds 
D) an open market purchase of bonds that results in inflation 
E) none of the above 
A) an increase in the budget deficit that is financed by money creation 
B) an increase in the budget deficit that is financed by foreigner investors' purchases of domestic bonds 
C) an increase in the budget deficit that coincides with a central bank sale of bonds 
D) an open market purchase of bonds that results in inflation 
E) none of the above

Question 11

Which of the following would decrease the cyclically adjusted deficit?

Accepted Answer

A) an increase in income 
B) a decrease in income 
C) an increase in the primary deficit 
D) a decrease in the primary deficit 
E) none of the above 
A) an increase in income 
B) a decrease in income 
C) an increase in the primary deficit 
D) a decrease in the primary deficit 
E) none of the above

Question 12

The United States financed the additional government spending during World War II through

Accepted Answer

A) an increase in the deficit. 
B) an increase in taxes. 
C) an increase in imports. 
D) increases in both the deficit and taxes. 
E) increases in both the deficit and imports. 
A) an increase in the deficit. 
B) an increase in taxes. 
C) an increase in imports. 
D) increases in both the deficit and taxes. 
E) increases in both the deficit and imports.

Question 13

A major reason to be concerned about any U.S.budget deficit is that

Accepted Answer

A) if it were maintained,it would lead to an ever-increasing debt-to-GDP ratio. 
B) it would exacerbate the problem of the low U.S.saving rate. 
C) under current legislation,it would lead to budget surpluses in the future. 
D) if it were to increase,Ricardian equivalence will no longer hold. 
E) since large deficits are associated with wars,the deficit might encourage the U.S.to become more adventuristic in its foreign policy. 
A) if it were maintained,it would lead to an ever-increasing debt-to-GDP ratio. 
B) it would exacerbate the problem of the low U.S.saving rate. 
C) under current legislation,it would lead to budget surpluses in the future. 
D) if it were to increase,Ricardian equivalence will no longer hold. 
E) since large deficits are associated with wars,the deficit might encourage the U.S.to become more adventuristic in its foreign policy.

Question 14

Based on our understanding of the U.S.budget,we know that

Accepted Answer

A) government accounts treat asset sales as revenues. 
B) government accounts do not treat asset sales as revenues. 
C) the NIPA accounts treat asset sales as revenues. 
D) neither the government accounts nor the NIPA accounts treat asset sales as revenues. 
A) government accounts treat asset sales as revenues. 
B) government accounts do not treat asset sales as revenues. 
C) the NIPA accounts treat asset sales as revenues. 
D) neither the government accounts nor the NIPA accounts treat asset sales as revenues.

Question 15

The debt ratio will increase by more in any given year when

Accepted Answer

A) the real interest rate is lower. 
B) the growth rate of GDP is higher. 
C) the initial debt ratio is greater. 
D) all of the above 
E) none of the above 
A) the real interest rate is lower. 
B) the growth rate of GDP is higher. 
C) the initial debt ratio is greater. 
D) all of the above 
E) none of the above

Question 16

When a government partially defaults its debt,a "haircut" of 20% means that

Accepted Answer

A) creditors receive 20% of what they owed. 
B) creditors receive 80% of what they owed. 
C) creditors receive 40% of what they owed. 
D) creditors receive 10% of what they owed. 
A) creditors receive 20% of what they owed. 
B) creditors receive 80% of what they owed. 
C) creditors receive 40% of what they owed. 
D) creditors receive 10% of what they owed.

Question 17

What are the primary causes of hyperinflations? Explain.

Accepted Answer

A hyperinflation simply means a very hig

Question 18

A higher deficit in the current year will lead to increased debt in the future only if

Accepted Answer

A) the deficit is greater than the previous year's deficit. 
B) the deficit-to-GDP ratio is greater than the debt-to-GDP ratio. 
C) it causes a drop in private saving. 
D) it causes an increase in private saving. 
E) none of the above 
A) the deficit is greater than the previous year's deficit. 
B) the deficit-to-GDP ratio is greater than the debt-to-GDP ratio. 
C) it causes a drop in private saving. 
D) it causes an increase in private saving. 
E) none of the above

Question 19

Government default is also called

Accepted Answer

A) debt restructuring. 
B) debt rescheduling. 
C) private sector involvement. 
D) all of the above 
A) debt restructuring. 
B) debt rescheduling. 
C) private sector involvement. 
D) all of the above

Question 20

Given nominal money growth,the amount of seignorage will be greater when

Accepted Answer

A) tax revenues are higher. 
B) real money balances are larger. 
C) the inflation rate is higher. 
D) foreign lending is higher. 
E) none of the above 
A) tax revenues are higher. 
B) real money balances are larger. 
C) the inflation rate is higher. 
D) foreign lending is higher. 
E) none of the above

Exam 23: Fiscal Policy: a Summing up

Which of the following is an entitlement program?

In the medium run,a tax cut that causes an increase in the budget deficit will affect which of the following?

The deficit at natural level of output is called

Since the early 1980s,debt ratios for the OECD countries have

Siegnorage is equal to

Hyperinflation refers to inflation in excess of ________ per month,

Explain fiscal dominance.

Suppose the Ricardian Equivalence proposition holds (i.e.,it is correct).What does this imply about the ability of fiscal policy to affect GDP? Explain.

What are the factors that will determine the size of some future required tax increase to pay off all debt?

Which of the following represents debt monetization?

Which of the following would decrease the cyclically adjusted deficit?

The United States financed the additional government spending during World War II through

A major reason to be concerned about any U.S.budget deficit is that

Based on our understanding of the U.S.budget,we know that

The debt ratio will increase by more in any given year when

When a government partially defaults its debt,a "haircut" of 20% means that

What are the primary causes of hyperinflations? Explain.

A higher deficit in the current year will lead to increased debt in the future only if

Government default is also called

Given nominal money growth,the amount of seignorage will be greater when

A Tour of the World

A Tour of the Book

The Goods Market

Financial Markets

Goods and Financial Marketsthe Is-Lm Model

The Labor Market

Putting All Markets Togetherthe As-Ad Model

The Phillips Curve,the Natural Rate of Unemployment,and Inflation

The Crisis

The Facts of Growth

Saving,capital Accumulation,and Output

Technological Progress and Growth

Technological Progress: the Short,the Medium,and the Long Run

Expectations: the Basic Tools

Financial Markets and Expectations

Expectations,consumption,and Investment

Expectations,output,and Policy

Openness in Goods and Financial Markets

The Goods Market in an Open Economy

Output,the Interest Rate,and the Exchange Rate

Exchange Rate Regimes

Should Policy Makers Be Restrained

Monetary Policy: a Summing up

Epilogue: the Story of Macroeconomics

an Introduction to National Income and Product Accounts

an Introduction to Econometrics

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