Macro 6

If the federal government's tax revenues are greater than its outlays, then the federal budget has a - surplus. - deficit. - transfer payment. - balanced budget.

surplus

A country has been in existence for only two years. In the first year, tax revenues were $1.0 million and outlays were $1.5 million. In the second year, tax revenues were $1.5 million and outlays were $2.0 million. At the end of the second year, the total government debt was ________. - $1 million - $2.5 million - $3.5 million - $0.5 million

$1 million

Suppose that real GDP equals potential GDP, but the government believes that the economy is in a below full-employment equilibrium. As a result, the government increases its expenditure on goods and services. In response to the government's fiscal policy, - an equilibrium with real GDP less than potential GDP will occur. - potential GDP decreases. - aggregate demand will increase. - None of the above answers is correct.

aggregate demand will increase

Suppose the economy is at a short-run equilibrium with real GDP greater than potential GDP. Which of the following fiscal policies would decrease real GDP and the price level? - an increase in taxes - a decrease in taxes - an increase in government expenditure - None of the above answers is correct.

an increase in taxes

A fall in income that results in a decrease in tax revenues is an example of ________. - a recession - discretionary fiscal policy - needs-tested tax programs - automatic fiscal policy

automatic fiscal policy

If the government has a balanced budget, the total amount of government debt is - increasing. - decreasing. - constant. - zero.

constant

If the government wants to engage in fiscal policy to increase real GDP, it could - decrease government expenditure in order to decrease aggregate demand. - decrease government expenditure in order to increase short-run aggregate supply. - increase government expenditure in order to increase short-run aggregate supply. - increase government expenditure in order to increase aggregate demand.

increase government expenditure in order to increase aggregate demand

During an expansion, tax revenues ________ and government transfer payments ________. - decrease; increase - decrease; decrease - increase; decrease - increase; increase

increase; decrease

If the government runs a deficit, the total amount of government debt is - increasing. - decreasing. - zero. - constant.

increasing

A government that currently has a budget deficit can balance its budget by ________. - decreasing tax revenues by more than it increases outlays - increasing tax revenues by more than it increases outlays - decreasing tax revenues by more than it decreases outlays - increasing both tax revenues and outlays by the same amount

increasing tax revenues by more than it increases outlays

A discretionary fiscal policy is a fiscal policy that - is triggered by the state of the economy. - requires action by the Congress. - involves a change in corporate tax rates. - involves a change in government defense spending.

requires action by the Congress

A budget surplus occurs when government - tax revenues equals outlays. - tax revenues equal social security expenditures. - tax revenues exceeds outlays. - outlays exceeds tax revenues.

tax revenues exceeds outlays

Suppose real GDP exceeds potential real GDP. If the government decreases its expenditures on goods and services, then real GDP ________ and the price level ________. - decreases; rises - decreases; falls - increases; rises - increases; falls

decreases; falls

In 2013, the U.S. government budget had a deficit. By definition, then, - tax revenues were greater than government outlays. - tax revenues were less than government outlays. - tax revenues were equal to government outlays. - the government debt became negative.

tax revenues were less than government outlays

A government incurs a budget deficit when - taxes are less than government outlays. - exports are less than imports. - taxes are greater than government outlays. - exports are greater than imports.

taxes are less than government outlays