eco test 5 part two
43) List the five categories of federal government expenditure.
1. Defense spending 2. Transfer payments 3. Grants to state and local governments 4. Interest payments 5. Other expenditures
19) To combat inflation, Congress and the president should A) decrease government spending. B) decrease taxes. C) raise interest rates D) increase transfer payments.
A
35) Lowering the individual income tax rate will increase household disposable income and consumption spending. TRUE OR FLASE
TRUE
3) Fiscal policy refers to changes in A) state and local taxes and purchases that are intended to achieve macroeconomic policy objectives. B) federal taxes and purchases that are intended to achieve macroeconomic policy objectives. C) federal taxes and purchases that are intended to fund the war on terrorism. D) the money supply and interest rates that are intended to achieve macroeconomic policy objectives
B
1) Congress and the president carry out fiscal policy through changes in A) interest rates and the money supply. B) taxes and the interest rate. C) government purchases and the money supply. D) government purchases and taxes.
D
2)Fiscal policy is determined by A) the Federal Reserve. B) the president and the Federal Reserve C) Congress and the Federal Reserve. D) Congress and the president.
D
23) Fiscal policy is defined as changes in federal ________ and ________ to achieve macroeconomic objectives such as price stability, high rates of economic growth, and high employment. A) taxes; interest rates B) taxes; the money supply C) interest rates; money supply D) taxes; expenditures
D
16) Which of the following is considered contractionary fiscal policy? A) Congress increases the income tax rate. B) Congress increases defense spending. C) Legislation removes a college tuition deduction from federal income taxes. D) The New Jersey legislature cuts highway spending to balance its budget.
A
21) A decrease in individual income taxes ________ disposable income, which ________ consumption spending. A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases
A
24) Which of the following is considered expansionary fiscal policy? A) Congress decreases the income tax rate. B) Congress increases defense spending. C) Legislation increases a college tuition deduction from federal income taxes. D) The Arizona legislature cuts highway spending to balance its budget.
A
4) Expansionary fiscal policy involves A) increasing government purchases or decreasing taxes. B) increasing taxes or decreasing government purchases. C) increasing the money supply and decreasing interest rates. D) decreasing the money supply and increasing interest rates
A
20) To combat a recession with discretionary fiscal policy, Congress and the president should A) decrease government spending to balance the budget. B) decrease taxes to increase consumer disposable income. C) lower interest rates and increase investment by increasing the money supply. D) raise taxes on interest and dividends, but not on personal income.
B
24) Which of the following would be considered a fiscal policy action? A) The Fed increases the money supply. B) Tax incentives are offered to encourage the purchase of fuel efficient cars. C) Spending on the war in Afghanistan is increased to promote homeland security. D) A tax cut is designed to stimulate spending during a recession.
D
4) Which of the following would be classified as fiscal policy? A) The federal government passes tax cuts to encourage firms to reduce air pollution. B) The Federal Reserve cuts interest rates to stimulate the economy. C) A state government cuts taxes to help the economy of the state. D) The federal government cuts taxes to stimulate the economy.
D
5) Which of the following is an objective of fiscal policy? A) energy independence from Middle East oil B) health care coverage for all Americans C) discovering a cure for Alzheimer's D) high rates of economic growth
D
36) Contractionary fiscal policy involves decreasing government purchases or increasing taxes. TRUE OR FLASE
TRUE
13) If the economy is slipping into a recession, which of the following would be an appropriate fiscal policy? A) an increase in the money supply and a decrease in interest rates B) a decrease in government purchases C) a decrease in taxes D) a decrease in oil prices
C
16) The largest source of federal government revenue in 2020 was A) sales taxes. B) corporate income taxes. C) individual income taxes D) payroll taxes to fund Social Security and Medicare programs.
C