Question 1

Income minus taxes is often called:

Accepted Answer

A)  government expenditures. 
B)  consumption. 
C)  investment. 
D)  gross income. 
E)  None of these answers is correct. 
A)  government expenditures. 
B)  consumption. 
C)  investment. 
D)  gross income. 
E)  None of these answers is correct.

Question 2

Explain how budget deficits lead to crowding out. Is there evidence of this?

Accepted Answer

Crowding out occurs when federal budget

Question 3

According to the Congressional Budget Office report "A 125-Year Picture of the Federal Government's Share of the Economy, 1950 to 2075," the share of federal government spending in GDP will climb to 40 percent by 2075, assuming:

Accepted Answer

A)  household consumption falls. 
B)  government spending rises sharply. 
C)  government spending falls slightly. 
D)  current policies stay in place. 
E)  the entire "baby boomer" generation retires in the same year. 
A)  household consumption falls. 
B)  government spending rises sharply. 
C)  government spending falls slightly. 
D)  current policies stay in place. 
E)  the entire "baby boomer" generation retires in the same year.

Question 4

When we discuss government expenditure, we are talking about only federal government expenditures.

Accepted Answer

A) True 
 B)False

Question 5

According to the law of diminishing returns, the longer we live, the:

Accepted Answer

A)  more we will be willing to pay for medical care than for other goods and services. 
B)  larger the burden on taxpayers to finance retirement for retirees. 
C)  less energy we will use. 
D)  less medical care we will need. 
E)  lower our incomes. 
A)  more we will be willing to pay for medical care than for other goods and services. 
B)  larger the burden on taxpayers to finance retirement for retirees. 
C)  less energy we will use. 
D)  less medical care we will need. 
E)  lower our incomes.

Question 6

The government's intertemporal budget constraint assumes that the budget is:

Accepted Answer

A)  never balanced. 
B)  balanced in the first period. 
C)  balanced in the last period. 
D)  always balanced. 
E)  None of these answers is correct. 
A)  never balanced. 
B)  balanced in the first period. 
C)  balanced in the last period. 
D)  always balanced. 
E)  None of these answers is correct.

Question 7

The budget balance is the:

Accepted Answer

A)  level of firm investment. 
B)  difference between exports and imports. 
C)  difference between household spending and income. 
D)  difference between tax revenue and government spending. 
E)  difference between movements of assets across countries. 
A)  level of firm investment. 
B)  difference between exports and imports. 
C)  difference between household spending and income. 
D)  difference between tax revenue and government spending. 
E)  difference between movements of assets across countries.

Question 8

What are the largest and smallest individual federal government expenditures? Sources of revenues?

Accepted Answer

• Expenditures: Largest-health

Question 9

The federal government usually finances its budget deficit by:

Accepted Answer

A)  raising taxes. 
B)  selling its real assets. 
C)  selling government bonds. 
D)  borrowing from commercial banks. 
E)  borrowing from foreign governments. 
A)  raising taxes. 
B)  selling its real assets. 
C)  selling government bonds. 
D)  borrowing from commercial banks. 
E)  borrowing from foreign governments.

Question 10

Assume the government does not "print money." Can the government run persistent budget deficits?

Accepted Answer

Yes. By borrowing today and repaying in

Question 11

If current generations are depleting nonrenewable resources, they must compensate future generations by:

Accepted Answer

A)  saving gold. 
B)  printing more money. 
C)  investing in capital. 
D)  buying more military equipment. 
E)  increasing the stock of renewable resources. 
A)  saving gold. 
B)  printing more money. 
C)  investing in capital. 
D)  buying more military equipment. 
E)  increasing the stock of renewable resources.

Question 12

According to the Congressional Budget Office report "A 125-Year Picture of the Federal Government's Share of the Economy, 1950 to 2075," by the year 2075, spending on entitlement programs will be about:

Accepted Answer

A)  19 percent of GDP. 
B)  21 percent of household expenditures. 
C)  100 percent of tax revenues. 
D)  21 percent of GDP. 
E)  zero. 
A)  19 percent of GDP. 
B)  21 percent of household expenditures. 
C)  100 percent of tax revenues. 
D)  21 percent of GDP. 
E)  zero.

Question 13

Refer to the following figure when answering the following questions.
Figure 18.1: Federal Government Receipts and Outlays, 1990-2012   (Source: Federal Reserve Economic Data, St. Louis Federal Reserve)
-Consider Figure 18.1. The federal government ran a surplus during the period:

Accepted Answer

A)  1990-1993. 
B)  1993-1997. 
C)  1998-2002. 
D)  2002-2006. 
E)  Not enough information is given. 
A)  1990-1993. 
B)  1993-1997. 
C)  1998-2002. 
D)  2002-2006. 
E)  Not enough information is given.

Question 14

During which period did the United States have the largest debt-to-GDP ratio? Why?

Accepted Answer

The 1940s; the Unite

Question 15

An implication of the intertemporal budget constraint is that the government can borrow as much as it wants.

Accepted Answer

A) True 
 B)False

Question 16

The source(s) of funds for the government is/are:

Accepted Answer

A)  tax revenues. 
B)  new borrowing. 
C)  printing money. 
D)  All of these answers are correct. 
E)  None of these answers is correct. 
A)  tax revenues. 
B)  new borrowing. 
C)  printing money. 
D)  All of these answers are correct. 
E)  None of these answers is correct.

Question 17

Income minus taxes is often called:

Accepted Answer

A)  investment. 
B)  consumption. 
C)  disposable income. 
D)  gross income. 
E)  None of these answers is correct. 
A)  investment. 
B)  consumption. 
C)  disposable income. 
D)  gross income. 
E)  None of these answers is correct.

Question 18

The amount of U.S. debt held by the public in 2015 was about:

Accepted Answer

A)  $160 billion. 
B)  $13.2 trillion. 
C)  $18.3 trillion. 
D)  $41 trillion. 
E)  $0. 
A)  $160 billion. 
B)  $13.2 trillion. 
C)  $18.3 trillion. 
D)  $41 trillion. 
E)  $0.

Question 19

In 2014, the ________ held about ________ of U.S. federal government debt.

Accepted Answer

A)  Federal Reserve; $11 trillion 
B)  Peoples Bank of China; $3 trillion 
C)  Social Security trust fund; $2.7 trillion 
D)  largest investment banks; $100 billion 
E)  European Central Bank; $250 billion 
A)  Federal Reserve; $11 trillion 
B)  Peoples Bank of China; $3 trillion 
C)  Social Security trust fund; $2.7 trillion 
D)  largest investment banks; $100 billion 
E)  European Central Bank; $250 billion

Question 20

Which of the following might worry prospective lenders to a government?

Accepted Answer

A)  high debt relative to income 
B)  a high debt-to-GDP ratio 
C)  a violent coup in the government 
D)  All of these answers are correct. 
E)  None of these answers is correct. 
A)  high debt relative to income 
B)  a high debt-to-GDP ratio 
C)  a violent coup in the government 
D)  All of these answers are correct. 
E)  None of these answers is correct.

Exam 18: The Government and the Macroeconomy

Income minus taxes is often called:

Explain how budget deficits lead to crowding out. Is there evidence of this?

According to the Congressional Budget Office report "A 125-Year Picture of the Federal Government's Share of the Economy, 1950 to 2075," the share of federal government spending in GDP will climb to 40 percent by 2075, assuming:

When we discuss government expenditure, we are talking about only federal government expenditures.

According to the law of diminishing returns, the longer we live, the:

The government's intertemporal budget constraint assumes that the budget is:

The budget balance is the:

What are the largest and smallest individual federal government expenditures? Sources of revenues?

The federal government usually finances its budget deficit by:

Assume the government does not "print money." Can the government run persistent budget deficits?

If current generations are depleting nonrenewable resources, they must compensate future generations by:

According to the Congressional Budget Office report "A 125-Year Picture of the Federal Government's Share of the Economy, 1950 to 2075," by the year 2075, spending on entitlement programs will be about:

Refer to the following figure when answering the following questions. Figure 18.1: Federal Government Receipts and Outlays, 1990-2012 (Source: Federal Reserve Economic Data, St. Louis Federal Reserve) -Consider Figure 18.1. The federal government ran a surplus during the period:

During which period did the United States have the largest debt-to-GDP ratio? Why?

An implication of the intertemporal budget constraint is that the government can borrow as much as it wants.

The source(s) of funds for the government is/are:

Income minus taxes is often called:

The amount of U.S. debt held by the public in 2015 was about:

In 2014, the ________ held about ________ of U.S. federal government debt.

Which of the following might worry prospective lenders to a government?

Introduction to Macroeconomics

Measuring the Macroeconomy

An Overview of Long-Run Economic Growth

A Model of Production

The Solow Growth Model

Growth and Ideas

The Labor Market, Wages, and Unemployment

Inflation

An Introduction to the Short Run

The Great Recession: a First Look

The Is Curve

Monetary Policy and the Phillips Curve

Stabilization Policy and the Asad Framework

The Great Recession and the Short-Run Model

Dsge Models: the Frontier of Business Cycle Research

Consumption

Investment

International Trade

Exchange Rates and International Finance

Parting Thoughts

Filters

In 2014, the held about of U.S. federal government debt.