Econ ch 13

taxes.

If the government wishes to increase the level of real GDP, it might reduce: taxes. the size of the budget deficit. transfer payments. its purchases of goods and services.

$460 billion.

The public debt for the economy is $540 billion. $400 billion. $580 billion. $460 billion.

built-in stability.

When government tax revenues change automatically and in a countercyclical direction over the course of the business cycle, this is an example of: impounding. money creation. built-in stability. the standardized budget.

fiscal policy.

When the federal government uses taxation and spending actions to stimulate the economy, it is conducting: fiscal policy. employment policy. incomes policy. monetary policy.

increase in taxes and government spending.

Which combination of fiscal policy would most likely be offsetting? Increase in taxes but no change in government spending. Decrease in taxes and increase in government spending. increase in taxes and government spending. Decrease in taxes but no change in government spending.

decrease in aggregate demand.

A contractionary fiscal policy can be illustrated by a (n): increase in aggregate supply. increase in aggregate demand. decrease in aggregate demand. change in the price level.

federal government spending exceeds tax revenues.

A federal budget deficit exists when: federal government assets are less than liabilities. federal government spending is increasing. federal government spending exceeds tax revenues. federal government taxation is decreasing.

34 percent

Approximately what percentage of the U.S. public debt is held by foreign individuals and institutions (2015)? 41 percent 34 percent 71 percent 26 percent

deficits during recessions and surpluses during periods of demand-pull inflation.

Countercyclical discretionary fiscal policy calls for: surpluses during both recessions and periods of demand-pull inflation. deficits during recessions and surpluses during periods of demand-pull inflation. surpluses during recessions and deficits during periods of demand-pull inflation. deficits during both recessions and periods of demand-pull inflation.

manipulation of government spending and taxes to stabilize domestic output, employment, and the price level.

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

expansionary fiscal policy

If the Congress passes legislation to increase government spending to counter the effects of a recession, then this would be an example of a (n): expansionary fiscal policy. nondiscretionary fiscal policy. contractionary fiscal policy. supply-side fiscal policy.

increased government spending or decreased taxation, or a combination of the two actions.

If the economy is in a recession and prices are relatively stable, then the discretionary fiscal policy or policies that would most likely be recommended to correct this macroeconomic problem would be: increased government spending or decreased taxation, or a combination of the two actions. increased government spending or increased taxation, but not a combination of the two actions. decreased government spending or decreased taxation, or a combination of the two actions. . increased government spending or increased taxation, or a combination of the two actions.

not change the size of the public debt.

Other things equal, an increase of corporate bonds from $140 billion to $150 billion in the economy would decrease the public debt by $20 billion. increase the public debt from $460 billion to $470 billion. not change the size of the public debt. increase the public debt from $600 billion to $610 billion.

Increase aggregate demand from AD2 to AD3 by decreasing taxes.

Refer to the above diagram. The economy is at equilibrium at point B. What fiscal policy would increase real GDP? Decrease aggregate demand from AD2 to AD3 by decreasing government spending. Increase aggregate demand from AD2 to AD1 by decreasing taxes. Decrease aggregate demand from AD2 to AD3 by increasing government spending. Increase aggregate demand from AD2 to AD3 by decreasing taxes.

AD3

Refer to the diagram, in which Qf is the full-employment output. Contractionary fiscal policy would be most appropriate if the economy's present aggregate demand curve were at AD0. AD2. AD3. AD1.

at any level of GDP below $400.

Refer to the diagram, in which T is tax revenues and G is government expenditures. All figures are in billions. The budget will entail a deficit at all levels of GDP. only when GDP is stable. at any level of GDP below $400. at any level of GDP above $400.

increase in government spending and a decrease in taxes.

The combination of fiscal policies that would reinforce each other and be most expansionary would be a (n): decrease in government spending and taxes. increase in government spending and taxes. decrease in government spending and an increase in taxes. increase in government spending and a decrease in taxes.

increases in government spending may raise the interest rate and thereby reduce private investment.

The crowding-out effect suggests that: increases in government spending will close a recessionary expenditure gap. increases in government spending may raise the interest rate and thereby reduce private investment. high taxes reduce both consumption and saving. increases in consumption are always at the expense of saving.

budget deficit.

The economy starts out with a balanced Federal budget. If the government then implements expansionary fiscal policy, then there will be a trade surplus. budget deficit. budget surplus. trade deficit.

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

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

the federal government owes to holders of U.S. securities.

The public debt is the amount of money that Americans owe to foreigners. the federal government owes to holders of U.S. securities. state and local governments owe to the federal government. the federal government owes to taxpayers.

recognition lag.

The time that elapses between the beginning of a recession or an inflationary episode and the identification of the macroeconomic problem is referred to as a (n): recognition lag. administrative lag. oerational lag. budget lag.

the bulk of the public debt is owned by U.S. citizens and institutions.

To say that "the U.S. public debt is mostly held internally" is to say that the public debt is equal to the land and building assets owned by the federal government. the bulk of the public debt is owned by U.S. citizens and institutions. only interest payments on the public debt are an economic burden. official figures understate the size of the public debt.

Increased taxation and decreased government spending.

Which of the following are contractionary fiscal policies? Decreased taxation and no change in government spending. Increased taxation and increased government spending. Increased taxation and decreased government spending. No change in taxation and increased in government spending.

Personal and corporate income tax collections automatically rise and transfers and subsidies automatically decline as GDP rises.

Which of the following best describes the built-in stabilizers as they function in the United States? Personal and corporate income tax collections automatically fall and transfers and subsidies automatically rise as GDP rises. The size of the multiplier varies inversely with the level of GDP. Personal and corporate income tax collections automatically rise and transfers and subsidies automatically decline as GDP rises. Personal and corporate income tax collections and transfers and subsidies all automatically vary inversely with the level of GDP.