Econ ch. 16/17 workbook
T/F Fiscal policy can sometimes affect aggregate supply unintentionally
true
T/F The Federal Insurance Contributions Act refers to payroll taxes
true
Suppose a bill is introduced that would require all American citizens to pay 1 percent of their income to a new program that supports adult literacy programs. What type of taxation is the bill proposing? a) proportional b) progressive c) incidence d) regressive
a
What is rational ignorance? a) most voters don't think its worth the effort to keep up with elected officials proposals b) elected officials ensure that their proposals are kept confidential c) people make a conscious decision not to vote in order to protest certain proposals d) people do not pay taxes for services they don't need
a
What will most likely result if output exceeds the economy's potential? a) higher inflation rate b) unemployment that exceeds its natural rate c) the government reduces taxes d) the government increases its spending
a
Why might legislatures prefer dealing with bureaus rather than with firms? a) bureaus are more responsive to legislature's concerns b) bureaus prevent legislators from rewarding political supporters with government jobs c) bureaus provide superior goods and services d) bureaus often provide overlapping services
a
what do automatic stabilizers aim to stabilize? a) disposable income and aggregate demand b) unemployment insurance c) income taxed d) medicare benefits
a
what is federal debt? a) the total amount owed by the federal government b) the amount by which annual spending exceeds annual revenue c) the total amount the government owes to foreign countries d) the amount of debt owed to households, firms, and banks
a
which of the following best defines the multiplier effect of fiscal policy? a) a change in fiscal policy affects the aggregate demand by more than the original change in spending or taxing b) a change in fiscal policy affects aggregate demand by less than the original change in spending or taxing c) a change in fiscal policy affects the aggregate demand by the same amount as the original change in spending or taxing d) a change in fiscal policy does not affect aggregate demand in any way
a
which of the following is an example of discretionary fiscal policy? a) congress votes to increase the amount of unemployment insurance a person may receive b) during an economic expansion, income taxes claim a growing percentage of income c) the progressive income tax protects against declines in disposable income d) the number of people collecting unemployment insurance increases during a recession
a
which term applies to the delay that results from time needed to identify a macroeconomic problem? a) recognition lag b) effectiveness lag c) implementation lag d) decision-making lag
a
How much time does it usually take for discretionary fiscal policy to become more effective? a) 6-9 months b) 9-18 months c) 18-24 months d) 24-30 months
b
Sin taxes would be applied to which of the following products? a) fast food b) alcoholic beverages c) automobiles d) vacations
b
What did maintaining an annually balanced budget usually cause? a) decreased unemployment during recessions b) overheated economy during expansions and increased unemployment during recessions c) the government spending more than its revenue d) government spending increasing during recessions
b
What is the marginal tax rate? a) the tax rate at which each household must pay for schools b) the percentage of each additional dollar of income that goes to pay the tax c) the rate that determines who actually bears the burden of a tax d) a tax rate that declines as income increases
b
When governments contract with private firms to produce public goods and services, they are using _____ to supply the product? a) the bureaucracy b) the market c) agencies d) households
b
Which of these reflects the order in which the four lags in the fiscal policy process typically occur? a) recognition lag, implementation lag, decision-making lag, effectiveness lag b) recognition lag, decision-making lag, implementation lag effectiveness lag c) decision-making lag, implementation lag, recognition lag, effectiveness lag d) decision-making lag, effectiveness lag, implementation lag, recognition lag
b
With which of the following statements would John Maynard Keynes most likely agree? a) prices and wages are flexible in the long run b) grim business expectation can discourage firms from investing c) changes in government spending have little effect on aggregate demand d) market forces can return the economy to full employment quickly
b
the centerpiece of President Bush's 168 billion dollar plan to stimulate the economy in 2008 was a) a government spending increase b) a one-time tax rebate c) an increase in corporate taxes d) an infrastructure development for roads
b
when bonds mature, how does the federal government pay off bond holders? a) by using the money from an increase in taxes b) by selling more bonds c) by borrowing money from foreign countries d) by selling land holdings
b
which of the following results from crowding out? a) interest rates decrease b) private investment decreases c) income tax decreases d) aggregate demand increases
b
For which of these project would a government be most likely to borrow money from households to firms? a) a new shopping mall b) increases in salary for government officials c) an airport d) a computer factory
c
Goods and services financed by the government... a) must be produced by government workers only b) must be produced only by private firms c) can be produced by government workers and/or private firms d) must be voted n by taxpayers before privately produced
c
What does the theory of maximizing support dictate? a) all Americans must belong to a political party b) firms support politicians who will pass laws to increase their profitability c) Elected representatives campaign to win as many votes and financial contributions as possible d) politicians will only follow the wishes of the political action committees that support them
c
What is an acceptable way for votes to express their dissatisfaction with local government? a) refuse to pay their taxes b) ignore public officials until their term is complete c) move into another jurisdiction d) do not obey laws they disagree with
c
What will most likely result if output exceeds the economy's potential? a) the rate of inflation is very low b) unemployment slightly increases c) there is full employment d) the rate of inflation drops rapidly
c
Which of the following is the generally accepted estimate of the natural rate of employment? a) 0-1 percent b) 2-3 percent c) 5-6 percent d) 9-10 percent
c
Which of the following will result if the economy achieves its potential output? a) the rate of inflation is very low b) unemployment slightly increases c) there is full employment d) the rate of inflation drops rapidly
c
With which of these statements would classical economist most likely agree? a) the source of unemployment lies within the market system b) natural market forces cannot end a recession c) the government should not interfere in the marketplace d) natural market forces alone cannot move an economy toward achieving potential output
c
With which of these types of taxation does the percentage of income paid in taxes decrease as income increases? a) progressive b) marginal c) regressive d) proportional
c
during which decade was stagflation a major problem? a) 20s b) 50s c) 70s d) 90s
c
how does gross debt differ from debt held by the public? a) debt held by the public usually is higher than gross debt b) gross debt includes debt held by households, firms, nonprofit institutions, and foreign entities c) gross debt includes US treasury securities purchases by various federal agencies d) economists ignore debt held by the public
c
how does the federal government finance s budget deficit? a) by raising income taxes b) by cutting US government securities d) by soliciting for donations
c
which of the following is true about automatic stabilizers? a) they usually cause the income tax rate to increase b) their goal is to decrease aggregate demand during a recession c) they adjust to the ups and downs of the economy to keep disposable income constant d) they affect government spending, but no government taxing
c
which of these situations would result in an expansionary gap? a) the economy performs at its potential output b) the economy does not produce as much as it can c) output exceeds the economy's potential d) inflation decreases
c
Most of the funds from the recovery act of 2009 were used for a) entitlements b) grants, contracts, and loans c) defense spending d) various tax benefits
d
What prompted the creation of Keynesian theory? a) WWI b) WW2 c) Vietnam d) the Great Depression
d
Which of the following is not an example of a bureau? a) the FBI b) the environmental protection agency c) the Pentagon d) the President's office
d
Which of these is not a source of local government revenue? a) state and federal aid b) property taxes c) user fees d) corporate income taxes
d
suppose during a major war, a country exceeds its potential output. what will most likely not happen in the long run after the war is over? a) unemployment will increase b) the country will once again perform at its potential output c) inflation rates will decline d) unemployment will decrease
d
what percent of the time has the federal government budget been in deficit since the Great Depression? a)10% b) 33% c) 50% d) 85%
d
which of the following is not an example of an automatic stabilizer? a) unemployment b) welfare payments c) progressive income tax d) corporate income tax
d
T/F Government bureaus receive a great deal of consumer feedback and, as a result, constantly are able to improve
false
T/F If you personally object to a government program, you can prevent your taxes from supporting it
false
T/F The employment act of 1946 barred the federal government from promoting full employment and price stability
false
T/F The goal of fiscal policy is to achieve an unemployment rate of zero
false, its impossible to get zero
T/F The gross debt is the amount of U.S treasury securities held by the public
false, just a portion is hold by the public
T/F A contraction gap results when the economy is exceeding its potential output
false, recessionary and beneath
T/F investment does not fluctuate as much as GDP does
false; GDP is stable
T/F Keynes belied that the economy would automatically return to its potential output in a short period of time
false; Government needs to be actively involved
T/F There is a bigger payoff in making wise public choices that private ones
false; always bigger payoff in profit oriented
T/F Certain laws that are in place to prevent elected representatives from catering special interest groups have completely eliminated this problem
false; constantly hear people
T/F High marginal tax rates increase people's incentives to work, save, and invest
false; decreases
T/F In a local government's budget, the largest spending category is police and fire protection
false; education
T/F lags make it easier to carry out discretionary fiscal policy
false; harder
T/F The economy benefits in the long run when it exceeds its potential output
false; hits
T/F The federal government relies primarily on user fees for its revenue
false; income tax
T/F The ability-to-pay tax principle focuses more on a taxpayer's benefit from a public good than the taxpayer's income
false; income, the ability or inability to pay
T/F By 2011, most federal spending shifted from income redistribution to defense
false; it didn't
T/F automatic stabilizers completely eliminate economic fluctuations
false; less impact
T/F U.S government outlays relative to GDP are the highest percentage of any industrial nation
false; lower
T/F the economy is less stable today than it was before the onset of the great depression
false; more stable
T/F before the Great Depression, federal surpluses occurred during war years
false; never had a surplus during war years
T/F A public good is rival in consumption
false; nonrival
T/F All states impose a general sales tax
false; not all but most do
T/F economists generally agree that the recovery act of 2009 was successful because it immediately created 3.5 million jobs
false; not how many jobs that makes it successful
T/F All goods and services financed by the government are also produced by the government
false; private companies
T/F Benefits-received taxation is the fairest way to tax people
false; there is no fair way to tax people
T/F Political action committees are to permitted to donate money to congressional campaigns
false; they are
T/F Keynes believed that fiscal policy would be effective in times of full employment
false; unemployment
T/F User fees are similar to prices for private goods except that the fees often are more than the cost of the actual good or service
false; user fees aren't concerned with making a profit
T/F The government does not fund higher education
false; we do
T/F Although the economy might exceed its potential output in the short run, it cannot exceed its potential in the long run
true
T/F Automatic stabilizers boost aggregate demand during periods of recession
true
T/F Before the 1930s, fiscal policy was seldom used to influence the overall performance of the economy
true
T/F Before the sixteenth amendment, the federal government raised revenue from taxes on imports, specific goods, and property taxes
true
T/F Governments can cover a deficit by borrowing from the public
true
T/F In public choice, each person gets one vote, regardless of income
true
T/F Income tax rates are progressive
true
T/F One of the effects of World War II was to boost the federal governments' spending
true
T/F The actions of government agencies often directly conflict with one another
true
T/F The cost to the typical voter of acquiring and acting on information about elected officials' proposals usually is greater than any possible benefit
true
T/F The efficient level of a public good can be found by examining the point at which the market demand curve intersects with the marginal cost curve
true
T/F The federal government relies primarily on the personal income tax for revenue
true
T/F The multiplier effect says that changes in fiscal policy affect aggregate demand by more than the original change in spending or taxing
true
T/F There is no cyclical employment at the natural rate of unemployment
true
T/F Voters in the United States usually elect representatives to voice their views on government issues
true
T/F a budget deficit results when government spending exceeds government revenue
true
T/F a typical recession will be more than half over before it is officially recognized
true
T/F decreased investment spending reduces the effectiveness of federal deficits that are intended to stimulate aggregate demand
true
T/F federal debt sums all federal deficits and subtracts federal surpluses
true
T/F foreigners owned about 46 percent of US debt in 2011 up from 20 percent in 1994
true
T/F it is impossible to fight unemployment and inflation at the same time with fiscal policy in the short run
true
T/F one way to measure debt over time is to compute it relative to GDP
true
T/F the debt ceiling is a limit on the total amount of money that the federal government can borrow. this limit has been raised many times in the last century
true
T/F the government has the authority to impose fine on firms that pollute the environment
true
T/F the natural rate of unemployment should be estimated before any discretionary fiscal policies are adopted
true
T/F the recovery act of 220 is a package of tax benefits and spending programs that was meant to stimulate aggregate demand
true