Macro Quiz 5

A budget surplus occurs when government expenditures are greater than tax revenues. True or False

False

____________________ policy is changes in government expenditures and taxation to achieve macroeconomic goals.

Fiscal

Aggregate ____________________ is the quantity supplied of all goods and services at different price levels.

Supply

A budget surplus occurs when government expenditures are greater than tax revenues. True or False

True

The short-run aggregate supply curve indicates a(n) _____________ relationship between the price level and the quantity supplied of Real GDP. a. direct b. inverse c. horizontal d. vertical

a. direct

If Total Expenditures increases: a. aggregate supply will increase b. aggregate demand will increase c. aggregate supply will decrease d. aggregate demand will decrease

b. aggregate demand will increase

An investment will be made: a. if the interest rate exceeds the expected rate of return b. if the expected rate of return exceeds the interest rate c. if the expected rate of return equals the interest rate d. All of the above

b. if the expected rate of return exceeds the interest rate

The ______________ lag occurs because enacting a change in fiscal policy takes time: a. information b. policy c. impact d. putting

b. policy

During an inflationary gap: a. individual income tax payments will increase, acting as an automatic stabilizer b. unemployment compensation payments will decrease, acting as an automatic stabilizer c. Both of the above d. Neither of the above

c. Both of the above

Net exports will increase if: a. there is an increase in foreign Real GDP b. the exchange rate for the dollar depreciates c. Both of the above d. Neither of the above

c. Both of the above

The ______________ lag occurs because, once a change in fiscal policy is enacted, its takes time before the new policy has its full effect on Real GDP: a. information b. policy c. impact d. putting

c. impact

A decrease in short-run aggregate supply could be caused by: a. an increase in wage rates b. an increase in the prices of non-labor inputs c. an adverse supply shock d. All of the above

d. All of the above

According to supply-side economists, lowering marginal tax rates: a. will increase incentives to earn higher income in the short run b. will increase incentives to increase the productive capacity of one's resources in the long run c. will increase production d. All of the above

d. All of the above

Fiscal policy may be mistimed because of: a. the information lag b. the policy lag c. the impact lag d. All of the above

d. All of the above

Which of the following will cause an increase in consumption? a. an increase in interest rates b. a decrease in taxes that increases disposable income c. an increase in stock prices that increases household wealth d. Both b. and c. above

d. Both b. and c. above