Chapter 13 warm up

The group of three economists appointed by the president to provide fiscal policy recommendations is the Council of Economic Advisers. Joint Economic Committee. Bureau of Economic Analysis. Federal Reserve Board of Governors.

Council of Economic Advisers.

The public debt is held as U.S. securities, corporate bonds, and common stock. Federal Reserve Notes. U.S. gold certificates. Treasury bills, Treasury notes, Treasury bonds, and U.S. savings bonds.

Treasury bills, Treasury notes, Treasury bonds, and U.S. savings bonds.

An appropriate fiscal policy for a severe recession is a decrease in government spending. a decrease in tax rates. appreciation of the dollar. an increase in interest rates.

a decrease in tax rates.

An appropriate fiscal policy for severe demand-pull inflation is an increase in government spending. depreciation of the dollar. a reduction in interest rates. a tax rate increase.

a tax rate increase.

The effect of a government surplus on the equilibrium level of GDP is substantially the same as a decrease in imports. an increase in saving. an increase in consumption. an increase in investment.

an increase in saving

Which of the following is the best example of public investment? salaries of senators and representatives government expenditures on food assistance programs construction of highways funding of regulatory agencies

construction of highways

Refer to the diagram. If the full-employment level of GDP is A, then it would be appropriate fiscal policy for government to decrease spending and increase taxes. decrease spending and decrease taxes. increase spending and increase taxes. increase spending and decrease taxes.

decrease spending and increase taxes.

Fiscal policy refers to the deliberate changes in government spending and taxes to stabilize domestic output, employment, and the price level. deliberate changes in government spending and taxes to achieve greater equality in the distribution of income. altering of the interest rate to change aggregate demand. fact that equal increases in government spending and taxation will be contractionary.

deliberate changes in government spending and taxes to stabilize domestic output, employment, and the price level.

Discretionary fiscal policy refers to any change in government spending or taxes that destabilizes the economy. the authority that the president has to change personal income tax rates. intentional changes in taxes and government expenditures made by Congress to stabilize the economy. the changes in taxes and transfers that occur as GDP changes.

intentional changes in taxes and government expenditures made by Congress to stabilize the economy.

Discretionary fiscal policy is so named because it is undertaken at the option of the nation's central bank. occurs automatically as the nation's level of GDP changes. involves specific changes in T and G undertaken expressly for stabilization at the option of Congress. is invoked secretly by the Council of Economic Advisers.

involves specific changes in T and G undertaken expressly for stabilization at the option of Congress.

Contractionary fiscal policy is so named because it involves a contraction of the nation's money supply. necessarily reduces the size of government. is aimed at reducing aggregate demand and thus achieving price stability. is expressly designed to expand real GDP.

is aimed at reducing aggregate demand and thus achieving price stability.

Expansionary fiscal policy is so named because it involves an expansion of the nation's money supply. necessarily expands the size of government. is aimed at achieving greater price stability. is designed to expand real GDP.

is designed to expand real GDP.

Increases in the federal budget deficit from 2007 to 2009 were caused exclusively by the loss of tax revenue due to recession. exclusively by expansionary fiscal policy, as shown through growth in the cyclically adjusted deficit. primarily by a combination of recession and expansionary fiscal policy. primarily by increased outlays to a rapidly growing number of Social Security recipients.

primarily by a combination of recession and expansionary fiscal policy.

The federal budget deficit is found by subtracting government tax revenues plus government borrowing from government spending in a particular year. subtracting government tax revenues from government spending in a particular year. cumulating the differences between government spending and tax revenues over all years since the nation's founding. subtracting government revenues from the noninvestment-type government spending in a particular year.

subtracting government tax revenues from government spending in a particular year.

An economist who favors smaller government would recommend tax cuts during recession and reductions in government spending during inflation. tax increases during recession and tax cuts during inflation. tax cuts during recession and tax increases during inflation. increases in government spending during recession and tax increases during inflation.

tax cuts during recession and reductions in government spending during inflation