Achieve Ch 10 Quiz

Figure: Laffer Curve 3) A supply-side economist is advocating reducing income tax rates. She is probably assuming that the economy is at point _____ in the graph. A. d B. b C. c D. a

A. d

Fiscal policy that focuses on shifting the long-run aggregate supply curve to the right is _____ policy. A. supply-side fiscal B. mandatory fiscal C. aggregate shifts D. contractionary

A. supply-side fiscal

An expansionary fiscal policy can result in A. higher unemployment rates. B. inflation and higher GDP. C. lower prices. D. a recession.

B. inflation and higher GDP.

Which of these is an example of contractionary fiscal policy? A. sending taxpayers a $600 rebate B. reducing military spending C. increasing federal spending to renovate college campuses D. building a new interstate highway

B. reducing military spending

The largest category of federal government spending in 2018 was A. education. B. net interest. C. defense. D. Social Security.

D. Social Security.

The largest source of federal government revenues is _____ taxes. A. excise and estate B. corporate income C. Social Security D. individual income

D. individual income

According to the crowding-out effect, if the government sells bonds to finance spending, _____ can eventually fall. A. exports and investment B. consumption and investment C. consumption and government expenditures D. government expenditures and investment

B. consumption and investment

The total accumulation of past deficits less surpluses is called the A. national deficit. B. public debt. C. national debt. D. public surplus.

C. national debt.

The _____ is the sum of past _____ less surpluses. A. budget deficit; public debts B. budget deficit; national debts C. public debt; national debts D. national debt; budget deficits

D. national debt; budget deficits

The _____ lag is the time it takes for policymakers to confirm that the economy is trending into or out of a recession. A. information B. decision C. implementation D. recognition

D. recognition

The advantage of automatic stabilizers over discretionary fiscal policy is that automatic stabilizers A. have the full consent of the legislature. B. do not require overt action by policymakers. C. have been vetted and approved by the courts. D. take longer to take effect than fiscal policy.

B. do not require overt action by policymakers.

Which policy do supply-side economists believe is the best for increasing the standard of living? A. increasing the supply of labor B. increasing investment in capital that boosts worker productivity C. raising taxes to support government public work projects D. redistributing income from the wealthy to the poor

B. increasing investment in capital that boosts worker productivity

The solution to the simultaneous presence of inflation and unemployment is to implement policies that shift the A. aggregate demand curve to the left. B. short-run aggregate supply curve to the right. C. aggregate demand curve to the right. D. short-run aggregate supply curve to the left.

B. short-run aggregate supply curve to the right.

Which of these is NOT involved with implementing fiscal policy in the United States? A. the House of Representatives B. the Supreme Court C. the Senate D. the president

B. the Supreme Court

_____ government spending, _____ transfer payments, and _____ taxes are all examples of expansionary fiscal policy. A. Reducing; increasing; raising B. Reducing; increasing; lowering C. Increasing; increasing; lowering D. Increasing; reducing; raising

C. Increasing; increasing; lowering

The focus of supply-side fiscal policies is on A. long-run trade balances. B. long-run balanced budgets. C. long-run economic growth. D. short-run increases in output.

C. long-run economic growth.

Suppose policymakers wish to use fiscal policy to fight inflation. Which statement is MOST accurate? A. They should not use fiscal policy because in the long run, the economy will always go back to equilibrium. B. Policymakers should use an expansionary policy because job creation is more important than inflation. C. The government can have the best of both worlds in the form of low inflation and economic growth. D. The way to lower the inflation rate is to decrease aggregate demand, which causes a rise in unemployment.

D. The way to lower the inflation rate is to decrease aggregate demand, which causes a rise in unemployment.

According to public choice economists, the federal government has expanded because A. the federal government is efficient in its spending. B. the public likes to pay higher taxes to finance more programs. C. taxpayers pay the full cost of current government operations. D. deficit spending has reduced the perceived cost of current government operations.

D. deficit spending has reduced the perceived cost of current government operations.