Quiz 9

The maximum amount of time that a person can receive welfare payments is _____ during a lifetime. 25 years 10 years 5 years 2 years

5 years

An increase in the money supply typically affects the economy with a lag that varies in time from: 18 to 36 months. 1 to 2 months. 3 to 6 months. 6 to 18 months.

6 to 18 months

The largest spending program for the U.S. federal government is: unemployment insurance. Social Security. Medicaid. Medicare.

Social Security

Bill Clinton's administration experienced a federal budget surplus. Which of the following is therefore correct? The national debt reached record high levels. The national debt held by the public decreased. Government expenditure was no longer counted as part of the federal budget. The federal budget was still in deficit, but the deficit was smaller in amount than in previous years.

The national debt held by the public decreased.

What demographic change in the United States will cause government spending to increase in the next 50 years? The population will be younger. Immigration will increase. The population older than 65 will grow. Women will have fewer children.

The population older than 65 will grow

Which of the following statements about the Social Security program is correct? Women, who generally live longer than men, benefit more from the system. The earlier you retire, the greater the benefits you receive from the Social Security system. On average, retirees in the United States receive about $8,000 per month in Social Security payments. Your Social Security withholdings from your paychecks are deposited into an account for you.

Women, who generally live longer than men, benefit more from the system.

When the government conducts fiscal policy, it makes up for a decrease in C with: an increase in G. a decrease in YR. a decrease in NX. an increase in M.

an increase in G

If the Fed overreacts to a negative spending shock by increasing money growth too much: both real GDP growth and inflation will decrease more than the Fed prefers. both real GDP growth and inflation will increase more than the Fed prefers. real GDP growth will increase more and inflation will increase less than the Fed prefers. real GDP growth will increase less and inflation will increase more than the Fed prefers.

both real GDP growth and inflation will increase more than the Fed prefers.

Which of the following limits the effectiveness of fiscal policy? crowding out the multiplier effect free riding behavior the big bucket effect

crowding out

What are the four major limits to fiscal policy? sticky wages, Ricardian equivalence, recognition lag, and crowding out crowding out, a drop in the bucket, a matter of timing, and real shocks aggregate demand deficiency, unemployed resources, long-run expenses, and implementation lag poor information, the multiplier effect, the bandwagon effect, and election timing

crowding out, a drop in the bucket, a matter of timing, and real shocks

Which of these would help a government fight a recession? paying down the national debt cutting taxes cutting spending raising taxes

cutting taxes

When C falls, the LRAS curve: does not move. becomes flatter. shifts to the right. shifts to the left.

does not move

Suppose you are a married person with one child but your whole family earns less than $20,000 a year. Which of the following will supplement your income? alternative minimum tax Social Security Federal Insurance Contribution Act Earned Income Tax Credit

earned income tax credit

The time necessary for a fiscal policy plan to have an impact is called the: effectiveness lag. legislative lag. implementation lag. recognition lag.

effectiveness lag

The Medicare program offers health-care benefits for the: elderly. poor and disabled. disabled only. poor.

elderly

The primary tools of fiscal policy are: money supply and money demand. taxation and interest rates. government expenditure and taxation. government expenditure and money supply.

government expenditure and taxation

The time necessary for government bureaucracies to carry out a fiscal policy plan is called the: implementation lag. effectiveness lag. recognition lag. legislative lag.

implementation lag

Many economists worry about the Federal Reserve overstimulating the economy because such overstimulation will lead to rising: unemployment. output growth. inflation. Solow growth.

inflation

Government spending on "interest on the debt" refers to: interest paid to owners of government debt held by the public. spending by the U.S. government on education and highways. interest charged by the U.S. government for U.S. foreign aid to other countries. interest charged by the U.S. government on loans to states for education programs.

interest paid to owners of government debt held by the public.

The time between which an economic shock is recognized and when the government passes a plan to carry out a policy response is called the: recognition lag. effectiveness lag. legislative lag. adjustment lag.

legislative lag

The time necessary for Congress to propose and pass a fiscal policy plan is called the: implementation lag. recognition lag. legislative lag. effectiveness lag.

legislative lag

When the text refers to the current U.S. national debt, it means the: total debt held by foreign governments. private debt held by households. national debt held by the public. public debt held by investors.

national debt held by the public

The money you pay into Social Security goes to: the investment fund of your choice. a trust that earns interest to help pay your benefits. pay current beneficiaries. an individual account.

pay current beneficiaries

The Medicaid program offers health-care benefits for the: poor and disabled. disabled only. unemployed. elderly and disabled.

poor and disabled

The time necessary to determine that an economic problem exists is called the: legislative lag. recognition lag. implementation lag. effectiveness lag.

recognition lag

The U.S. Social Security tax (FICA) is an example of a: flat tax. regressive tax. progressive tax. proportional tax.

regressive tax

When C falls, the aggregate demand curve: shifts to the right. becomes flatter. shifts to the left. becomes steeper

shifts to the left