Economics 211 exam 3

When employment decreases in the U.S. economy, the AUTOMATIC effect on federal tax revenues and federal government spending is to:

A. Cut taxes revenues and raise spending

Assume the economy is in a recession and real GDP is below full employment. The marginal propensity to consume (MPC) is 0.75, and the government follows the Keynesian economics by using the expansionary fiscal property to increase aggregate demand (total spending). If an increase of 3,000 billion aggregate demand can restore full employment, the government should:

A. Increase transfer payments by 1,000 billion.

If your disposable income increases from 80,000 to 90,000 and your consumption increases from 72,000 to 76,000, your marginal propensity to consume (MPC) is:

B. 0.4

As the marginal propensity to consume (MPC) decrease, the spending multiplier:

B. decreases

The benefits-received principle of taxation is most evident in:

B. excise taxes on gasoline

According to the "Commanding Heights" video, the economy of Russia during the 1920's was a prime example of: A. deregulation B. Austrian economics C. communism D. pure capitalism E. moderate economic planning

C.

Suppose the economy is on the classical range of the aggregate supply curve and has a problem with inflation. which of the following is an appropriate discretionary fiscal policy to use in this situation? A. More government regulation B. increase federal spending C. Higher Taxes D. Increased transfer payments E. an increase in the money supply

C.

Which of the following statements is true? A. Supply-side fiscal property suggest increasing the level of government regulation i the economy. B. Fiscal property is the manipulation of the nations money supply to influence the nations output. C. Discretionary fiscal property is the deliberate use of changes in government purchases and taxes to stabilize the economy. D. the tax multiplier is the change in aggregate demand resulting from an initial change in government purchases. E. Automatic stabilizers help the economy to expand during inflationary times.

C.

If the marginal propensity to save (MPS) is 0.20, the value of the net tax multiplier is:

C. 4

Contractionary fiscal property consists of:

C. Decreasing government spending

Suppose inflation is a threat because the current aggregate demand curve will increase by 600 billion at any price level. If the MPC is 0.75, federal policymakers could follow Keynesian economics and restrain inflation by:

C. Increasing taxes by 200 billion.

Assume the marginal propensity to consume is 0.75 and the government increases taxes by $250 billion. The aggregate demand curve will shift to the

C. left by 750 billion

According to the commanding heights video, A. World War II led to the great depression B. Keynes' ideas were not accepted until several decades after World War II. C. Keynes believed in communism. D. Keynes' solution to unemployment was for the govern to spend money.

D.

Which of the following is the best example of an automatic stabilizer? A. Defense Spending B. Highway construction C. Interest on the national debt. D. Welfare Payments E. Foreign aid

D.

If the marginal propensity to consume (MPC) is 0.6, the value of the spending multiplier is:

D. 2.5

Joanne has an income of 40,000 and pays 4,500 in taxes. when Joanne's income rises to 50,000, her tax bill rises to 6,500. what is Joanne's marginal tax rate?

D. 20 percent

If the MPC is 0.80, and if the goal is to increase aggregate demand by 200 million, the by how much would government spending have to change to generate this increase in aggregate demand?

D. 40 million

Which of the following taxes contributed to the greatest percentage of total federal government tax revenues in recent years?

D. Individual income taxes

which of the following U.S. taxes is the most consistent with the ability-to-pay principle?

D. The federal income tax

According to the video "Commanding Heights," which of the following actions sparked the German economic miracle after World War II?

D. the removal of price controls

Supply-siders' policy recommendations include

E. Lower tax rates and decreased government regulation

According to the supply-side fiscal policy, reducing tax rates on wages and profits will:

E. reduce both unemployment and inflation

In which of the following expenditure categories did the U.S. Federal Government have the largest outlays in 2014?

Income Security

Mary pays a tax of 8,000 on her income of 80,000, while Bob pays a tax of 3,500 on his income of 40,000. This tax is:

Progressive