Question 1

Taxes can have an important effect on

Accepted Answer

A)   the labor supply.
B)   saving.
C)   economic growth.
D)   all of the aboveE) A) and B)
F) None of the above

Question 2

Changes in government purchases affect aggregate demand only indirectly through consumption spending.

Accepted Answer

A) True 
 B)False

Question 3

What are the two tools of fiscal policy that governments can use to affect the level of aggregate demand?

Accepted Answer

A)   government spending and taxation
B)   government spending and technology improvements
C)   taxation and controlling imports
D)   taxation and controlling exportsE) All of the above
F) None of the above

Question 4

The federal budget has three components. Name them.

Accepted Answer

discretionary spendi...

Question 5

Economic advisers who fear that the economy is growing too rapidly would recommend that the government decrease spending and/or increase taxes.

Accepted Answer

A) True 
 B)False

Question 6

Huge increases in government spending and record low levels of unemployment during the Vietnam War era in the late 1960s led policy makers to fear that

Accepted Answer

A)   the economy was growing too fast, which would increase unemployment.
B)   the economy was growing too fast, which would increase inflation.
C)   the economy was slipping into a recession, which would increase unemployment.
D)   the economy was slipping into a recession, which would increase inflation.E) None of the above
F) B) and C)

Question 7

Individual income tax is the ________ single component of federal revenue.

Accepted Answer

A)   largest
B)   second largest
C)   smallest
D)   least importantE) None of the above
F) All of the above

Question 8

Fiscal actions to eliminate a recession are likely to decrease the federal budget deficit.

Accepted Answer

A) True 
 B)False

Question 9

According to supply-side economics, a(n) ________ in the tax rate tends to increase the labor supply and ________ aggregate output.

Accepted Answer

A)   decrease; increase
B)   increase; decrease
C)   decrease; decrease
D)   increase; increaseE) A) and B)
F) A) and C)

Question 10

In the United States, the use of fiscal policy tools to stabilize the economy gained prominence during

Accepted Answer

A)   the depression era.
B)   the Kennedy administration.
C)   the Reagan administration.
D)   the Clinton administration.E) B) and C)
F) A) and C)

Question 11

Recall the Application about the relationship between tax rates and tax revenues which was proposed by Yu Juo, one of the twelve wise men who succeeded Confucius in ancient China, to answer the following question(s) .
-Recall the Application. The idea regarding the relationship between tax rates and tax revenues proposed by Yu Juo is very similar to the idea proposed by economist

Accepted Answer

A)   Adam Smith.
B)   Arthur Laffer.
C)   David Ricardo.
D)   Ben Bernanke.E) A) and B)
F) A) and C)

Question 12

Who sets the rules for entitlements when spending is authorized under this category?

Accepted Answer

A)   the President
B)   the agency involved
C)   the Congress when it appropriates the spending
D)   each individual stateE) B) and C)
F) A) and D)

Question 13

Suppose an economy has a balanced federal budget, and a large increase in oil prices plunges the economy into a recession. Tax revenues will ________ and expenditures on transfer payments will ________, resulting in a budget ________.

Accepted Answer

A)   fall; increase; deficit
B)   increase; increase; surplus
C)   fall; fall; deficit
D)   increase; fall; surplusE) All of the above
F) A) and B)

Question 14

The government strives to operate at neither a deficit nor surplus budget in order to keep the federal budget

Accepted Answer

A)   balanced.
B)   equal to inflation.
C)   in line with the stock market.
D)   equal to that of other countries.E) A) and D)
F) All of the above

Question 15

Because the government has so much money, and can print more, it does not need to borrow and therefore rarely pays net interest on debt.

Accepted Answer

A) True 
 B)False

Question 16

In the United States during the 1930s

Accepted Answer

A)   government spending and taxes both increased, resulting in zero net fiscal expansion.
B)   government spending and taxes both decreased, resulting in a net fiscal contraction.
C)   government spending increased and taxes decreased, resulting in a fiscal expansion.
D)   government spending decreased and taxes increased, resulting in a fiscal contraction.E) A) and C)
F) A) and D)

Question 17

In the United States, the temporary tax surcharge of 1968

Accepted Answer

A)   had no impact on consumer spending.
B)   decreased consumer spending by less than was originally estimated.
C)   decreased consumer spending by more than was originally estimated.
D)   actually increased consumer spending.E) A) and D)
F) A) and C)

Question 18

The prospect of future deficits

Accepted Answer

A)   encourages government to conduct expansionary fiscal policy.
B)   would prompt government to vastly expand discretionary spending.
C)   requires a government to eliminate all entitlement spending.
D)   limits the ability of government to conduct fiscal policy in the near future.E) All of the above
F) None of the above

Question 19

President George W. Bush used part of the budget surplus inherited from the Clinton administration to

Accepted Answer

A)   fund tax cuts.
B)   stimulate the economy that was slowing down following the end of the high-tech investment boom.
C)   increase government entitlement spending.
D)   both A and BE) A) and B)
F) B) and C)

Question 20

Corporate profits are taxed by state and local governments, but not by the federal government.

Accepted Answer

A) True 
 B)False

Exam 10: Fiscal Policy

In the United States, the temporary tax surcharge of 1968

Correct Answer
verified

Corporate profits are taxed by state and local governments, but not by the federal government.

Correct Answer
verified

Fiscal actions to eliminate a recession are likely to decrease the federal budget deficit.

Correct Answer
verified

Changes in government purchases affect aggregate demand only indirectly through consumption spending.

Correct Answer
verified

Huge increases in government spending and record low levels of unemployment during the Vietnam War era in the late 1960s led policy makers to fear that

Correct Answer
verified

Individual income tax is the ________ single component of federal revenue.

Correct Answer
verified

Suppose an economy has a balanced federal budget, and a large increase in oil prices plunges the economy into a recession. Tax revenues will and expenditures on transfer payments will , resulting in a budget .

Correct Answer
verified

Because the government has so much money, and can print more, it does not need to borrow and therefore rarely pays net interest on debt.

Correct Answer
verified

Correct Answer
verified

The federal budget has three components. Name them.

Correct Answer
verified
discretionary spendi...
View Answer

According to supply-side economics, a(n) in the tax rate tends to increase the labor supply and aggregate output.

Correct Answer
verified

In the United States, the use of fiscal policy tools to stabilize the economy gained prominence during

Correct Answer
verified

Economic advisers who fear that the economy is growing too rapidly would recommend that the government decrease spending and/or increase taxes.

Correct Answer
verified

The prospect of future deficits

Correct Answer
verified

In the United States during the 1930s

Correct Answer
verified

Taxes can have an important effect on

Correct Answer
verified

President George W. Bush used part of the budget surplus inherited from the Clinton administration to

Correct Answer
verified

Who sets the rules for entitlements when spending is authorized under this category?

Correct Answer
verified

What are the two tools of fiscal policy that governments can use to affect the level of aggregate demand?

Correct Answer
verified

The government strives to operate at neither a deficit nor surplus budget in order to keep the federal budget

Correct Answer
verified

Exam 10: Fiscal Policy

In the United States, the temporary tax surcharge of 1968

Correct AnswerverifiedShow Answer

Corporate profits are taxed by state and local governments, but not by the federal government.

Correct AnswerverifiedShow Answer

Fiscal actions to eliminate a recession are likely to decrease the federal budget deficit.

Correct AnswerverifiedShow Answer

Changes in government purchases affect aggregate demand only indirectly through consumption spending.

Correct AnswerverifiedShow Answer

Huge increases in government spending and record low levels of unemployment during the Vietnam War era in the late 1960s led policy makers to fear that

Correct AnswerverifiedShow Answer

Individual income tax is the ________ single component of federal revenue.

Correct AnswerverifiedShow Answer

Suppose an economy has a balanced federal budget, and a large increase in oil prices plunges the economy into a recession. Tax revenues will ________ and expenditures on transfer payments will ________, resulting in a budget ________.

Correct AnswerverifiedShow Answer

Because the government has so much money, and can print more, it does not need to borrow and therefore rarely pays net interest on debt.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The federal budget has three components. Name them.

Correct Answerverifieddiscretionary spendi...View AnswerShow Answer

According to supply-side economics, a(n) ________ in the tax rate tends to increase the labor supply and ________ aggregate output.

Correct AnswerverifiedShow Answer

In the United States, the use of fiscal policy tools to stabilize the economy gained prominence during

Correct AnswerverifiedShow Answer

Economic advisers who fear that the economy is growing too rapidly would recommend that the government decrease spending and/or increase taxes.

Correct AnswerverifiedShow Answer

The prospect of future deficits

Correct AnswerverifiedShow Answer

In the United States during the 1930s

Correct AnswerverifiedShow Answer

Taxes can have an important effect on

Correct AnswerverifiedShow Answer

President George W. Bush used part of the budget surplus inherited from the Clinton administration to

Correct AnswerverifiedShow Answer

Who sets the rules for entitlements when spending is authorized under this category?

Correct AnswerverifiedShow Answer

What are the two tools of fiscal policy that governments can use to affect the level of aggregate demand?

Correct AnswerverifiedShow Answer

The government strives to operate at neither a deficit nor surplus budget in order to keep the federal budget

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Suppose an economy has a balanced federal budget, and a large increase in oil prices plunges the economy into a recession. Tax revenues will and expenditures on transfer payments will , resulting in a budget .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
discretionary spendi...
View Answer

According to supply-side economics, a(n) in the tax rate tends to increase the labor supply and aggregate output.

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