Study Guide

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  • Topic: Public finance, Tax, Fiscal policy
  • Pages : 7 (976 words )
  • Download(s) : 167
  • Published : April 11, 2013
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| The most likely way the public debt burdens future generations, if at all, is by: Answer | | Selected Answer:|    reducing the current level of investment.  |
Correct Answer:|    reducing the current level of investment.  |
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* Question 2
1 out of 1 points
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| Which are contractionary fiscal policies? 

Answer | | | |
| Selected Answer:|     Increased taxation and decreased government spending   |
Correct Answer:|     Increased taxation and decreased government spending   |
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* Question 3
1 out of 1 points
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| The time which elapses between the beginning of a recession or an inflationary episode and the identification of  the macroeconomic problem is referred to as a(n): Answer | | | | | Selected Answer:|     Recognition lag

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Correct Answer:|     Recognition lag
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* Question 4
1 out of 1 points
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| With a regressive tax system, as the level of income increases in an economy, the average tax rate will: Answer | | | | | Selected Answer:|     Decrease
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Correct Answer:|     Decrease
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* Question 5
1 out of 1 points
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| Discretionary fiscal policy refers to: Answer | | | | | Selected Answer:|    changes in taxes and government expenditures made by Congress to stabilize the economy.   |
Correct Answer:|    changes in taxes and government expenditures made by Congress to stabilize the economy.   |
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* Question 6
1 out of 1 points
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| The financing of a government deficit increases interest rates and, as a result, reduces investment spending. This statement describes: Answer | | | | | Selected Answer:|    the crowding-out effect.

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Correct Answer:|    the crowding-out effect.
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* Question 7
1 out of 1 points
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| In an aggregate demand and aggregate supply graph, an expansionary fiscal policy can be illustrated by a: Answer | | | | | Selected Answer:|    Rightward shift in the aggregate demand curve   |

Correct Answer:|    Rightward shift in the aggregate demand curve   |
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* Question 8
1 out of 1 points
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Refer to the above diagram. The economy is at equilibrium at point C. What fiscal policy would increase real  GDP? Answer | | | | | Selected Answer:|     Increase aggregate demand from AD1 to AD2 by increasing government spending   |

Correct Answer:|     Increase aggregate demand from AD1 to AD2 by increasing government spending   |
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* Question 9
1 out of 1 points
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| A major concern with the Social Security trust fund is that: Answer | | | | | Selected Answer:|    The fund will be insufficient to cover obligations in one or two decades | Correct Answer:|    The fund will be insufficient to cover obligations in one or two decades |

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* Question 10
1 out of 1 points
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| A government economist states that: "The collection of personal income tax revenues automatically falls duringAnswer | | | | | Selected Answer:|     Serves as an automatic stabilizer for the economy | Correct Answer:|     Serves as an automatic stabilizer for the economy |

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* Question 11
1 out of 1 points
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| When the Federal government takes action to change taxes and spending to stimulate the economy such policyAnswer | | | | | Selected Answer:|     Discretionary
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Correct Answer:|     Discretionary
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* Question 12
1 out of 1 points
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| If the Congress passes legislation to cut taxes to counter the effects of a severe recession, then this would be an  example of aAnswer | | | | | Selected Answer:|    Expansionary fiscal policy

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Correct Answer:|    Expansionary fiscal policy
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* Question 13
1 out of 1 points
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| A government budget deficit occurs when...
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