Question 1

The United States was created by an act of government.

Accepted Answer

A) True 
 B)False  False

Question 2

The size of the multiplier effect of government spending is smaller when

Accepted Answer

A)  import spending is lower. 
B)  import spending is higher. 
C)  saving is lower. 
D)  export spending is higher. 
E)  income taxes are lower. 
A)  import spending is lower. 
B)  import spending is higher. 
C)  saving is lower. 
D)  export spending is higher. 
E)  income taxes are lower. B

Question 3

Government debt can be a smart choice if the positive impact on the economy of spending financed by debt is greater than the interest cost.

Accepted Answer

A) True 
 B)False  True

Question 4

Ricardian equivalence is named for the famous Cuban economist Ricky Ricardo.

Accepted Answer

A) True 
 B)False

Question 5

An economy has a debt of $50 billion at the beginning of the year. Tax revenues, net of transfers, are equal to $10 billion while spending is $15 billion. At the end of the year, the debt is $45 billion.

Accepted Answer

A) True 
 B)False

Question 6

Which government fiscal policy is a positive supply shock?

Accepted Answer

A)  increasing taxes 
B)  decreasing transfer payments 
C)  decreasing government spending 
D)  increasing government spending 
E)  none of the above 
A)  increasing taxes 
B)  decreasing transfer payments 
C)  decreasing government spending 
D)  increasing government spending 
E)  none of the above

Question 7

The "No - Markets Fail Often" camp believes the long-run benefits of increased aggregate supply outweigh the short-run mismatches between reduced aggregate demand and aggregate supply.

Accepted Answer

A) True 
 B)False

Question 8

An economy has $20 billion in debt at the beginning of the year. Tax revenues, net of transfers, are $5 billion while government spending is $15 billion. At the end of the year, the debt is eliminated.

Accepted Answer

A) True 
 B)False

Question 9

The cyclical deficit

Accepted Answer

A)  is a persistent economic fact. 
B)  occurs when the economy is at full employment. 
C)  arises only because real GDP does not equal potential GDP. 
D)  is an accumulation of the government debt. 
E)  is none of the above. 
A)  is a persistent economic fact. 
B)  occurs when the economy is at full employment. 
C)  arises only because real GDP does not equal potential GDP. 
D)  is an accumulation of the government debt. 
E)  is none of the above.

Question 10

Supply-siders support lower tax rates because they believe that

Accepted Answer

A)  tax revenues will rise. 
B)  incentives to save will increase. 
C)  more consumers will do research and development. 
D)  governments will spend more. 
E)  taxes have positive externalities. 
A)  tax revenues will rise. 
B)  incentives to save will increase. 
C)  more consumers will do research and development. 
D)  governments will spend more. 
E)  taxes have positive externalities.

Question 11

A government begins the year with a debt of $50 billion, collects $10 billion in tax revenues and spends $4 billion. Debt at the end of the year is

Accepted Answer

A)  $50 billion. 
B)  $46 billion. 
C)  $64 billion. 
D)  $44 billion. 
E)  $36 billion. 
A)  $50 billion. 
B)  $46 billion. 
C)  $64 billion. 
D)  $44 billion. 
E)  $36 billion.

Question 12

It is a largely a myth about the national debt that

Accepted Answer

A)  government borrowing may crowd out private investment. 
B)  government borrowing may crowd in private investment. 
C)  high interest payments on the debt may create self-perpetuating debt. 
D)  Canada will go bankrupt unless we repay the debt. 
E)  going into debt may be a not-smart choice. 
A)  government borrowing may crowd out private investment. 
B)  government borrowing may crowd in private investment. 
C)  high interest payments on the debt may create self-perpetuating debt. 
D)  Canada will go bankrupt unless we repay the debt. 
E)  going into debt may be a not-smart choice.

Question 13

Since automatic stabilizers were introduced after the Great Depression, business cycles in Canada have been less frequent, and the contractions have been less severe.

Accepted Answer

A) True 
 B)False

Question 14

The claim by supply-siders that "tax cuts will increase government tax revenues" is a normative statement.

Accepted Answer

A) True 
 B)False

Question 15

The word fiscal comes from a Latin word meaning the public treasury.

Accepted Answer

A) True 
 B)False

Question 16

In describing government, the words act, participate and responsibility indicate the speaker is a hands-off politician.

Accepted Answer

A) True 
 B)False

Question 17

Which government fiscal policy is a negative supply shock?

Accepted Answer

A)  decreasing taxes 
B)  decreasing transfer payments 
C)  decreasing government spending 
D)  increasing government spending 
E)  none of the above 
A)  decreasing taxes 
B)  decreasing transfer payments 
C)  decreasing government spending 
D)  increasing government spending 
E)  none of the above

Question 18

Government should always try to balance the budget during a recession.

Accepted Answer

A) True 
 B)False

Question 19

Supply-siders believe people will respond to lower income tax rates by

Accepted Answer

A)  working more hours, increasing total tax revenues. 
B)  working more hours, with constant total tax revenues. 
C)  working fewer hours, decreasing total tax revenues. 
D)  working fewer hours, increasing total tax revenues. 
E)  stopping work and stop paying taxes. 
A)  working more hours, increasing total tax revenues. 
B)  working more hours, with constant total tax revenues. 
C)  working fewer hours, decreasing total tax revenues. 
D)  working fewer hours, increasing total tax revenues. 
E)  stopping work and stop paying taxes.

Question 20

What decreases the size of the multiplier effect?

Accepted Answer

A)  Consumers buy more imports. 
B)  Consumers save less and spend more. 
C)  Income tax rates decrease. 
D)  Businesses export more. 
E)  Businesses invest more. 
A)  Consumers buy more imports. 
B)  Consumers save less and spend more. 
C)  Income tax rates decrease. 
D)  Businesses export more. 
E)  Businesses invest more.

The United States was created by an act of government.

The size of the multiplier effect of government spending is smaller when

Government debt can be a smart choice if the positive impact on the economy of spending financed by debt is greater than the interest cost.

Ricardian equivalence is named for the famous Cuban economist Ricky Ricardo.

An economy has a debt of $50 billion at the beginning of the year. Tax revenues, net of transfers, are equal to $10 billion while spending is $15 billion. At the end of the year, the debt is $45 billion.

Which government fiscal policy is a positive supply shock?

The "No - Markets Fail Often" camp believes the long-run benefits of increased aggregate supply outweigh the short-run mismatches between reduced aggregate demand and aggregate supply.

An economy has $20 billion in debt at the beginning of the year. Tax revenues, net of transfers, are $5 billion while government spending is $15 billion. At the end of the year, the debt is eliminated.

The cyclical deficit

Supply-siders support lower tax rates because they believe that

A government begins the year with a debt of $50 billion, collects $10 billion in tax revenues and spends $4 billion. Debt at the end of the year is

It is a largely a myth about the national debt that

Since automatic stabilizers were introduced after the Great Depression, business cycles in Canada have been less frequent, and the contractions have been less severe.

The claim by supply-siders that "tax cuts will increase government tax revenues" is a normative statement.

The word fiscal comes from a Latin word meaning the public treasury.

In describing government, the words act, participate and responsibility indicate the speaker is a hands-off politician.

Which government fiscal policy is a negative supply shock?

Government should always try to balance the budget during a recession.

Supply-siders believe people will respond to lower income tax rates by

What decreases the size of the multiplier effect?

Whats in Economics for You Scarcity, Opportunity Cost, Trade, and Models

Making Smart Choices: the Law of Demand

Show Me the Money: the Law of Supply

Coordinating Smart Choices: Demand and Supply

Are Your Smart Choices Smart for All Macroeconomics and Microeconomics

Up Around the Circular Flow: Gdp, Economic Growth, and Business Cycles

Costs of Not Working and Living: Unemployment and Inflation

Skating to Where the Puck Is Going: Aggregate Supply and Aggregate Demand

Money Is for Lunatics: Demanders and Suppliers of Money

Trading Dollars for Dollars Exchange Rates and Payments With the Rest of the World

Steering Blindly Monetary Policy and the Bank of Canada

Are Sweatshops All Bad Globalization and Trade Policy

Filters

Exam 12: Spending Others Money: Fiscal Policy, Deficits, and National Debt

The United States was created by an act of government.

The size of the multiplier effect of government spending is smaller when

Government debt can be a smart choice if the positive impact on the economy of spending financed by debt is greater than the interest cost.

Ricardian equivalence is named for the famous Cuban economist Ricky Ricardo.

An economy has a debt of $50 billion at the beginning of the year. Tax revenues, net of transfers, are equal to $10 billion while spending is $15 billion. At the end of the year, the debt is $45 billion.

Which government fiscal policy is a positive supply shock?

The "No - Markets Fail Often" camp believes the long-run benefits of increased aggregate supply outweigh the short-run mismatches between reduced aggregate demand and aggregate supply.

An economy has $20 billion in debt at the beginning of the year. Tax revenues, net of transfers, are $5 billion while government spending is $15 billion. At the end of the year, the debt is eliminated.

The cyclical deficit

Supply-siders support lower tax rates because they believe that

A government begins the year with a debt of $50 billion, collects $10 billion in tax revenues and spends $4 billion. Debt at the end of the year is

It is a largely a myth about the national debt that

Since automatic stabilizers were introduced after the Great Depression, business cycles in Canada have been less frequent, and the contractions have been less severe.

The claim by supply-siders that "tax cuts will increase government tax revenues" is a normative statement.

The word fiscal comes from a Latin word meaning the public treasury.

In describing government, the words act, participate and responsibility indicate the speaker is a hands-off politician.

Which government fiscal policy is a negative supply shock?

Government should always try to balance the budget during a recession.

Supply-siders believe people will respond to lower income tax rates by

What decreases the size of the multiplier effect?

Whats in Economics for You Scarcity, Opportunity Cost, Trade, and Models

Making Smart Choices: the Law of Demand

Show Me the Money: the Law of Supply

Coordinating Smart Choices: Demand and Supply

Are Your Smart Choices Smart for All Macroeconomics and Microeconomics

Up Around the Circular Flow: Gdp, Economic Growth, and Business Cycles

Costs of Not Working and Living: Unemployment and Inflation

Skating to Where the Puck Is Going: Aggregate Supply and Aggregate Demand

Money Is for Lunatics: Demanders and Suppliers of Money

Trading Dollars for Dollars Exchange Rates and Payments With the Rest of the World

Steering Blindly Monetary Policy and the Bank of Canada

Are Sweatshops All Bad Globalization and Trade Policy

Filters