Question 1

Which of the following ﬁscal policy changes would be the most expansionary?

Accepted Answer

A)   a $40 billion increase in government spending
B)   a $20 billion tax cut and $20 billion increase in government spending
C)   a $10 billion tax cut and $30 billion increase in government spending
D)   a $40 billion tax cut

Question 2

What does the cyclically adjusted budget measure and of what signiﬁcance is this concept?

Accepted Answer

The cyclically adjusted budget measures ...

Question 3

An effective expansionary ﬁscal policy will

Accepted Answer

A)   reduce a cyclical deﬁcit but necessarily increase the actual deﬁcit.
B)   reduce the cyclically adjusted deﬁcit.
C)   increase the cyclically adjusted deﬁcit but reduce the actual deﬁcit.
D)   always result in a balanced actual budget once full employment is achieved.

Question 4

If Congress passes legislation to increase government spending to counter the effects of a recession, then this would be an example of a(n)

Accepted Answer

A)   supply-side ﬁscal policy
B)   expansionary ﬁscal policy.
C)   contractionary ﬁscal policy.
D)   nondiscretionary ﬁscal policy.

Question 5

Which of the following statements is correct?

Accepted Answer

A)   Federal deﬁcits were larger in the early 2000s than in the late 2000s.
B)   Deep tax cuts always expand tax revenues and reduce the public debt.
C)   The public debt has usually declined during wartime.
D)   There is a tendency for the public debt to grow during recessions.

Question 6

Financing wartime expenditures by increasing internally held public debt permits a nation to defer a part
of the economic cost of war.

Accepted Answer

A) True 
 B)False

Question 7

The so-called crowding-out effect refers to government spending crowding out private investment
spending.

Accepted Answer

A) True 
 B)False

Question 8

Gross Domestic Product (GDP)   Consumption (C)  $0$40100120200200300280400360\begin{array} { | c | c | } \hline 	ext { Gross Domestic Product (GDP)  } & 	ext { Consumption (C)  } \\hline \$ 0 & \$ 40 \\hline 100 & 120 \\hline 200 & 200 \\hline 300 & 280 \\hline 400 & 360 \\hline\end{array} Gross Domestic Product (GDP)  $0100200300400​ Consumption (C)  $40120200280360​​  The accompanying table is the before-tax consumption schedule for a closed economy. If a lump-sum tax (the same tax amount at each level of GDP)  of $40 is imposed in this economy, the tax system

Accepted Answer

A)   is regressive.
B)   is proportional.
C)   is progressive.
D)   may be either proportional or progressive.

Question 9

The concept of a "political business cycle" implies a misuse of ﬁscal policy making it a source of
economic instability.

Accepted Answer

A) True 
 B)False

Question 10

When Social Security contributions have exceeded payouts in the past, the excess amounts were used
to help ﬁnance the federal government's budget deﬁcits.

Accepted Answer

A) True 
 B)False

Question 11

The American Recovery and Reinvestment Act of 2009 was implemented primarily to

Accepted Answer

A)   reduce inﬂationary pressure caused by oil price increases.
B)   curb the overspending by households that contributed to the Great Recession.
C)   bring the federal budget back into balance.
D)   stimulate aggregate demand and employment.

Question 12

More than half of the U.S. public debt is owed to Americans.

Accepted Answer

A) True 
 B)False

Question 13

Accepted Answer

A)   an increase in taxes and an increase in government spending
B)   a decrease in taxes and an increase in government spending
C)   an increase in taxes and a decrease in government spending
D)   a decrease in taxes and a decrease in government spending

Question 14

Accepted Answer

A)   cyclically adjusted budget surplus.
B)   actual budget deﬁcit.
C)   cyclically adjusted budget deﬁcit.
D)   actual budget surplus.

Question 15

When the Federal government uses taxation and spending actions to stimulate the economy, it is conducting

Accepted Answer

A)   ﬁscal policy.
B)   incomes policy.
C)   monetary policy.
D)   employment policy.

Question 16

The average tax rate required to service the public debt is roughly measured by

Accepted Answer

A)   the absolute size of the debt.
B)   the debt as a fraction of the GDP.
C)   interest on the debt as a percentage of the GDP.
D)   the ratio of government spending to the GDP.

Question 17

The built-in stabilizers in the economy tend to

Accepted Answer

A)   fully offset irregular swings in real GDP.
B)   magnify somewhat the irregular swings in real GDP.
C)   dampen the irregular swings in real GDP.
D)   overcompensate for the irregular swings in real GDP.

Question 18

Economists refer to a budget deﬁcit that exists when the economy is achieving full employment as a

Accepted Answer

A)   cyclical deﬁcit.
B)   cyclically adjusted deﬁcit.
C)   natural deﬁcit.
D)   nonrecurring deﬁcit.

Question 19

A major advantage of the built-in or automatic stabilizers is that they

Accepted Answer

A)   simultaneously stabilize the economy and reduce the absolute size of the public debt.
B)   automatically produce surpluses during recessions and deﬁcits during inﬂations.
C)   require no legislative action by Congress to be made effective.
D)   guarantee that the federal budget will be balanced over the course of the business cycle.

Question 20

In 2018, foreign ownership of the total public debt of the United States was about

Accepted Answer

A)   10 percent.
B)   29 percent.
C)   60 percent.
D)   75 percent.

Exam 13: Fiscal Policy, Deficits, and Debt

An effective expansionary ﬁscal policy will

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

Correct Answer
verified

If Congress passes legislation to increase government spending to counter the effects of a recession, then this would be an example of a(n)

Correct Answer
verified

A major advantage of the built-in or automatic stabilizers is that they

Correct Answer
verified

What does the cyclically adjusted budget measure and of what signiﬁcance is this concept?

Correct Answer
verified
The cyclically adjusted budget measures ...
View Answer

Correct Answer
verified

In 2018, foreign ownership of the total public debt of the United States was about

Correct Answer
verified

The built-in stabilizers in the economy tend to

Correct Answer
verified

Economists refer to a budget deﬁcit that exists when the economy is achieving full employment as a

Correct Answer
verified

The American Recovery and Reinvestment Act of 2009 was implemented primarily to

Correct Answer
verified

Financing wartime expenditures by increasing internally held public debt permits a nation to defer a part of the economic cost of war.

Correct Answer
verified

When the Federal government uses taxation and spending actions to stimulate the economy, it is conducting

Correct Answer
verified

The average tax rate required to service the public debt is roughly measured by

Correct Answer
verified

When Social Security contributions have exceeded payouts in the past, the excess amounts were used to help ﬁnance the federal government's budget deﬁcits.

Correct Answer
verified

More than half of the U.S. public debt is owed to Americans.

Correct Answer
verified

The so-called crowding-out effect refers to government spending crowding out private investment spending.

Correct Answer
verified

Correct Answer
verified

The concept of a "political business cycle" implies a misuse of ﬁscal policy making it a source of economic instability.

Correct Answer
verified

Which of the following ﬁscal policy changes would be the most expansionary?

Correct Answer
verified

Exam 13: Fiscal Policy, Deficits, and Debt

An effective expansionary ﬁscal policy will

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If Congress passes legislation to increase government spending to counter the effects of a recession, then this would be an example of a(n)

Correct AnswerverifiedShow Answer

A major advantage of the built-in or automatic stabilizers is that they

Correct AnswerverifiedShow Answer

What does the cyclically adjusted budget measure and of what signiﬁcance is this concept?

Correct AnswerverifiedThe cyclically adjusted budget measures ...View AnswerShow Answer

Correct AnswerverifiedShow Answer

In 2018, foreign ownership of the total public debt of the United States was about

Correct AnswerverifiedShow Answer

The built-in stabilizers in the economy tend to

Correct AnswerverifiedShow Answer

Economists refer to a budget deﬁcit that exists when the economy is achieving full employment as a

Correct AnswerverifiedShow Answer

The American Recovery and Reinvestment Act of 2009 was implemented primarily to

Correct AnswerverifiedShow Answer

Financing wartime expenditures by increasing internally held public debt permits a nation to defer a part of the economic cost of war.

Correct AnswerverifiedShow Answer

When the Federal government uses taxation and spending actions to stimulate the economy, it is conducting

Correct AnswerverifiedShow Answer

The average tax rate required to service the public debt is roughly measured by

Correct AnswerverifiedShow Answer

When Social Security contributions have exceeded payouts in the past, the excess amounts were used to help ﬁnance the federal government's budget deﬁcits.

Correct AnswerverifiedShow Answer

More than half of the U.S. public debt is owed to Americans.

Correct AnswerverifiedShow Answer

The so-called crowding-out effect refers to government spending crowding out private investment spending.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The concept of a "political business cycle" implies a misuse of ﬁscal policy making it a source of economic instability.

Correct AnswerverifiedShow Answer

Which of the following ﬁscal policy changes would be the most expansionary?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The cyclically adjusted budget measures ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified