Deck 47: Fiscal Policy

Question 1

Whats defention of terms:
-automatic fiscal policy

Answer 1

policies that are fixed in place by law for the indefinite future

Question 2

Whats defention of terms:
-balanced budget

Answer 2

condition under which government expenditures equal taxes

Question 3

Whats defention of terms:
-Debt

Answer 3

occurs when the accumulated yearly budget deficits of government are greater than the budget surpluses

Question 4

Whats defention of terms:
-Deficit

Question 5

Whats defention of terms:
-discretionary fiscal policy

Question 6

Whats defention of terms:
-fiscal policy

Question 7

Whats defention of terms:
-Surplus

Question 8

Whats defention of terms:
-Transfer payments

Question 9

Define and describe fiscal policy tools, and give historical examples of how they have been used.
-What fiscal policy finally brought the U.S. out of the Great Depression of the 1930's? Explain.

Question 10

Compare and contrast conservative and progressive views on fiscal policy.
-What problems are created by active fiscal policies according to conservative economists?

Question 11

Compare and contrast conservative and progressive views on fiscal policy.
-Give some examples of fiscal policy that progressive economists would use to help the economy. How would progressive economists counter conservative criticisms of fiscal policy?

Question 12

Discuss how budget deficits, budget surpluses, and debt enter into the debate on fiscal policy.
-Describe how fiscal policy decisions can be constrained by high debt.

Question 13

Discuss how budget deficits, budget surpluses, and debt enter into the debate on fiscal policy.
-How would budget deficits be erased through the use of fiscal policy, according to progressive economists?

Question 14

Explain how fiscal policy should be used in a recession or if there is inflation, and describe how the appropriate fiscal policy affects recession and inflation.
-What fiscal policies should be used if there is a recession? Explain how they would work.

Question 15

Explain how fiscal policy should be used in a recession or if there is inflation, and describe how the appropriate fiscal policy affects recession and inflation.
-What fiscal policies should be used if there is inflation? Explain how they would work.

Question 16

List and describe the problems of using fiscal policy.
-State some of the political issues/problems with fiscal policy. Give an historical example.

Question 17

List and describe the problems of using fiscal policy.
-How might the use of fiscal policy have a negative impact on some private businesses? Explain.

Question 18

Explain how military spending affects the economy.
-Why is military spending usually politically popular? Who benefits? Who does not benefit?

Question 19

Explain how military spending affects the economy.
-What are some opportunity costs to military spending?

Question 20

Explain how military spending affects the economy.
-Explain the "guns versus butter" debate. Where would you stand on this debate? Why?

Question 21

Compare and contrast the fiscal policies of the Clinton and Bush administrations
-Name some key fiscal policies used by the Bush administration (2001-2006). What was their impact?

Question 22

Compare and contrast the fiscal policies of the Clinton and Bush administrations
-Name some key fiscal policies used by the Clinton administration (1993-2001). What was their impact?

Question 23

Compare and contrast the fiscal policies of the Clinton and Bush administrations
-Explain why wages grew more slowly than productivity and GDP during the 1990s.

Question 24

Explain why there was a budget surplus in the later Clinton years.
-Other than expansion, what contributed to a budget surplus? What spending was cut and why?

Question 25

Explain why there was a budget surplus in the later Clinton years.
-What role did investment play in the expansion of the 1990s?

Question 26

Explain why there is a budget deficit in the Bush years.
-How and why has the amount of military spending differed from the Clinton administration of the 1990s to the Bush administration of 2001-2006?

Question 27

Explain why there is a budget deficit in the Bush years.
-What spending has been cut during the Bush administration? Increased? What has happened to taxes?

Question 28

Describe and explain patterns of spending and taxes during recent U.S. wars.
-Use historical examples to demonstrate what happens to government spending during periods of war.

Question 29

Describe and explain patterns of spending and taxes during recent U.S. wars.
-What happens to taxes during period of war? Why?

Question 30

Explain why there is an expansion during period of war and recessions after the war.
-Explain why there is an expansion during periods of war and recessions after the war.

Question 31

What does the term, "fiscal policy," mean?

A) actions taken by the Federal Reserve to change the interest rate.
B) actions taken by the Financial Accounting Standards Board to establish standards for accountants.
C) actions taken by the Surgeon General to set standards for diet and exercise.
D) actions taken by the government involving spending and collection of revenues.

Question 32

A government budget deficit is defined as

A) the amount that a government owes to bondholders.
B) the amount that a government refunds to taxpayers.
C) the amount the government spends in excess of revenues.
D) the amount the government collects in excess of expenditures.

Question 33

A government transfer payment is defined as

A) when the government engages private contractors to provide a service previously performed by government employees.
B) when the government borrows funds from private investors.
C) when the government pays money to individuals that is not a payment for a current good or service.
D) when the government purchases goods and services from the business sector.

Question 34

Which of the following would be considered a transfer payment?

A) purchases of oil for the strategic petroleum reserve.
B) purchases of military goods for the army.
C) payments to a private subcontractor providing services to the military.
D) payments to wheat farmers when wheat prices fall below $3.80 per bushel.

Question 35

John Maynard Keynes is famous for

A) arguing that government should never intervene in the economy.
B) arguing that government should intervene in the economy only to protect private property.
C) arguing that governments should focus on providing incentives to business to increase aggregate supply.
D) for his focus on the role of aggregate demand in the problems of inflation and unemployment.

Question 36

The basic formula developed in the simplified Keynesian model is

A) raise taxes and lower spending to fight unemployment during recessions.
B) lower taxes and increase spending to fight unemployment during recessions.
C) raise taxes and increase spending to fight unemployment during recessions.
D) lower taxes and lower spending to fight unemployment during recessions.

Question 37

The basic formula developed in the simplified Keynesian model is

A) raise taxes and lower spending to fight inflation during expansions.
B) lower taxes and increase spending to fight inflation during expansions.
C) raise taxes and increase spending to fight inflation during expansions.
D) lower taxes and lower spending to fight inflation during expansions..

Question 38

A significant political problem hindering the implementation of Keynesian policies during a recession is

A) reaching agreement on whose taxes should be raised.
B) reaching agreement on whose taxes should be cut.
C) reaching agreement on which government programs should be cut.
D) reaching agreement on reducing the size of the budget deficit.

Question 39

The Keynesian model provides no simple fiscal solution to

A) a situation of high unemployment and low inflation.
B) a situation of low unemployment and high inflation.
C) a situation of high unemployment and high inflation.
D) a situation of low unemployment and low inflation.

Question 40

The fiscal policy that faces the fewest political obstacles is

A) raising taxes.
B) cutting spending.
C) cutting military spending.
D) cutting taxes.

Question 41

When military spending declines at the conclusion of a war, what usually happens?

A) there is a major economic expansion.
B) there is a recession.
C) there is an increase in inflation.
D) there is an increase in aggregate demand.

Question 42

During the Clinton years (1993 to 2001),

A) the economy was characterized by a long period of stagnation.
B) the economy was characterized by a long period of rapid economic growth.
C) the economy was characterized by slow growth and stagnant wages during the first half of the period and by rapid growth and rising wages in the second half.
D) the economy was characterized by rapid growth and rising wages during the first half of the period and by slow growth and stagnant wages during the second half.

Question 43

The economy went into a recession in March 2001, what policies did President Bush implement in response?

A) tax cuts aimed primarily at middle class and low income consumers in order to stimulate consumption.
B) tax cuts aimed primarily at wealth individuals in order to stimulate savings and investment.
C) tax increases across all income groups in order to finance increased government spending.
D) a sharp increase in all discretionary, nonmilitary spending.

Question 44

What were some of the factors that led to a budget surplus toward the end of the Clinton administration?

A) increased spending for education led to higher economic growth.
B) the government drastically reduced Social Security payments.
C) spending on infrastructure such as highways and airports led to higher economic growth.
D) most discretionary spending was frozen, while taxes increased with higher incomes during the expansion.

Question 45

In World War II, government spending for the war

A) was approximately 4% of GDP.
B) was financed entirely by increased taxes.
C) was approximately 40% of GDP.
D) was financed entirely from the surplus accumulated during the Great Depression.