Macroeconomics Chapter 16

Which of the following is considered expansionary fiscal policy? Select one: A. Congress decreases the income tax rate. B. Legislation increases a college tuition deduction from federal income taxes. C. The Arizona legislature cuts highway spending to balance its budget. D. Congress increases defense spending.

A. Congress decreases the income tax rate.

If the federal government's expenditures are less than its tax revenues, then Select one: A. a budget surplus results. B. a budget deficit results. C. the budget is balanced. D. No conclusion can be drawn here regarding the budget surplus or deficit without information regarding government purchases versus other outlays.

A. a budget surplus results.p

Before the Great Depression of the 1930s, the majority of government spending took place at the ________ and after the Great Depression the majority of government spending took place at the ________. Select one: A. local level; federal level B. federal level; state level C. federal level; state and local levels D. state and local levels; federal level

D. state and local levels; federal level

Which of the following is the largest category of federal government expenditures? Select one: A. interest on the debt B. grants to state and local governments C. defense spending D. transfer payments

D. transfer payments

Before the Great Depression of the 1930s, the majority of government spending took place at the ________ and after the Great Depression the majority of government spending took place at the ________. Select one: a. state and local levels; federal level b. federal level; state level c. federal level; state and local levels d. local level; federal level

a. state and local levels; federal level

For the federal deficit to be lowered, Select one: a. the federal government's expenditures must be lower than its tax revenue. b. the federal government must decrease its spending and increase net exports. c. the Federal Reserve must reduce the money supply. d. the Federal Reserve must raise interest rates and lower the required reserve ratio.

a. the federal government's expenditures must be lower than its tax revenue.

Which of the following is an example of discretionary fiscal policy? Select one: a. the tax cuts passed by Congress in 2001 to combat the recession b. an increase in unemployment insurance payments during a recession c. an increase in income tax receipts with rising income during an expansion d. a decrease in food stamps issued during an expansion or boom

a. the tax cuts passed by Congress in 2001 to combat the recession

Social Security Select one: a. currently pays retirees benefits equal to what they paid into the system. b. is a system whereby current retirees are paid from taxes collected from current workers. c. has not been successful in reducing poverty among elderly Americans. d. has a greater number of workers per retiree today as compared to when it started.

b. is a system whereby current retirees are paid from taxes collected from current workers.

The federal government debt equals Select one: a. tax revenues minus government spending. b. the accumulation of past budget deficits. c. government spending minus tax revenues. d. the total value of U.S. Treasury bonds outstanding.

d. the total value of U.S. Treasury bonds outstanding.

Which of the following is a government expenditure, but is not a government purchase? Select one: A. The Federal government pays to support research on AIDS. B. The federal government pays out an unemployment insurance claim. C. The federal government pays the salary of an FBI agent. D. The federal government buys a Humvee.

B. The federal government pays out an unemployment insurance claim.

The increase in the amount that the government collects in taxes when the economy expands and the decrease in the amount that the government collects in taxes when the economy goes into a recession is an example of Select one: A. automatic monetary policy. B. automatic stabilizers. C. discretionary fiscal policy. D. discretionary monetary policy.

B. automatic stabilizers.

An increase in individual income taxes ________ disposable income, which ________ consumption spending. Select one: A. increases; increases B. decreases; decreases C. increases; decreases D. decreases; increases

B. decreases; decreases

Social Security Select one: A. currently pays retirees benefits equal to what they paid into the system. B. is a system whereby current retirees are paid from taxes collected from current workers. C. has not been successful in reducing poverty among elderly Americans. D. has a greater number of workers per retiree today as compared to when it started.

B. is a system whereby current retirees are paid from taxes collected from current workers.

The problem causing most recessions is too little Select one: A. unemployment. B. spending. C. taxes. D. money (currency plus checking accounts).

B. spending.

Which of the following would be considered a fiscal policy action? Select one: A. The Fed increases the money supply. B. Tax incentives are offered to encourage the purchase of fuel efficient cars. C. A tax cut is designed to stimulate spending during a recession. D. Spending on the war in Afghanistan is increased to promote homeland security.

C. A tax cut is designed to stimulate spending during a recession.

Expansionary fiscal policy involves Select one: A. increasing the money supply and decreasing interest rates. B. increasing taxes or decreasing government purchases. C. increasing government purchases or decreasing taxes. D. decreasing the money supply and increasing interest rates.

C. increasing government purchases or decreasing taxes.

For the federal deficit to be lowered Select one: A. the federal government must increase its spending and increase net exports. B. the Federal Reserve must raise interest rates and lower the required reserve ratio. C. the federal government's expenditures must be lower than its tax revenue. D. the Federal Reserve must reduce the money supply.

C. the federal government's expenditures must be lower than its tax revenue.

Historically, the largest U.S. federal budget deficits as a percentage of GDP in the 20th century occurred during Select one: A. the Great Depression. B. 1970-1997. C. the Vietnam war. D. World War I and World War II.

D. World War I and World War II.

During the twentieth century, the largest budget deficits as a percentage of GDP occurred Select one: A. during the 1980s. B. during the Vietnam war. C. during the 1990s. D. during World Wars I and II.

D. during World Wars I and II.

From the 1960s to 2018, transfer payments Select one: A. have declined by half as a percentage of total federal government expenditures. B. remained the same percentage of total federal government expenditures. C. have grown very slowly as a percentage of total federal government expenditures. D. have risen from 25 percent to about 49 percent of federal government expenditures.

NOT B