Week 4 Knowledge Check Study Guide
Week 4 Knowledge Check Study Guide
Concepts
Mastery
BUDGET SURPLUS
Questions
100%
1
100%
2
3
TAX POLICY
100%
4
5
FISCAL POLICY
100%
6
BUDGET DEFICIT AND
BUDGET SURPLUS
Score: 6 / 6
Concept: BUDGET SURPLUS
Mastery
100%
1.
In the long-run framework, budget surpluses
Questions
1
A. should be run whenever output dips below potential output
B. should never be run since they crowd out investment in the short-run C. are better than budget deficits over the long-run because unlike budget deficits, they increase savings and investment
D. should be run on a permanent basis since they boost saving and investment and stimulate growth
Correct:
The Correct Answer is: C.
Concept: BUDGET DEFICIT AND BUDGET SURPLUS
Mastery
100%
2.
The budget deficit or surplus is
Questions
2
3
A. well defined and straightforward to measure
B. well defined but frequently distorted by creative but improper accounting practices
C. difficult to measure and can be defined legitimately in several ways D. so arbitrarily defined that it is meaningless
Correct:
The Correct Answer is: C.
3.
Deficits and surpluses are best viewed as
A. comprehensive measures of a government budget
B. a summary measure of a nation's fiscal policy
C. a summary measure of the financial health of the economy
D. a summary measure of a nation's monetary policy
Correct:
The Correct Answer is: B.
Concept: TAX POLICY
Mastery
100%
Questions
4
5
4.
Suppose the government increases spending by $30 billion and raises taxes at by $20 billion at the same time. Then,
A. interest rates will most likely stay the same
B. interest rates will most likely increase
C. business investment is not likely to change
D. business investment is likely to increase due to crowding out
Correct:
The Correct Answer is: B.
5.
Because automatic stabilizers lower transfer payments and raise tax receipts as an economy recovers from a recession, they
A. slow down the pace of an economic recovery
B. increase the
Concepts
Mastery
BUDGET SURPLUS
Questions
100%
1
100%
2
3
TAX POLICY
100%
4
5
FISCAL POLICY
100%
6
BUDGET DEFICIT AND
BUDGET SURPLUS
Score: 6 / 6
Concept: BUDGET SURPLUS
Mastery
100%
1.
In the long-run framework, budget surpluses
Questions
1
A. should be run whenever output dips below potential output
B. should never be run since they crowd out investment in the short-run C. are better than budget deficits over the long-run because unlike budget deficits, they increase savings and investment
D. should be run on a permanent basis since they boost saving and investment and stimulate growth
Correct:
The Correct Answer is: C.
Concept: BUDGET DEFICIT AND BUDGET SURPLUS
Mastery
100%
2.
The budget deficit or surplus is
Questions
2
3
A. well defined and straightforward to measure
B. well defined but frequently distorted by creative but improper accounting practices
C. difficult to measure and can be defined legitimately in several ways D. so arbitrarily defined that it is meaningless
Correct:
The Correct Answer is: C.
3.
Deficits and surpluses are best viewed as
A. comprehensive measures of a government budget
B. a summary measure of a nation's fiscal policy
C. a summary measure of the financial health of the economy
D. a summary measure of a nation's monetary policy
Correct:
The Correct Answer is: B.
Concept: TAX POLICY
Mastery
100%
Questions
4
5
4.
Suppose the government increases spending by $30 billion and raises taxes at by $20 billion at the same time. Then,
A. interest rates will most likely stay the same
B. interest rates will most likely increase
C. business investment is not likely to change
D. business investment is likely to increase due to crowding out
Correct:
The Correct Answer is: B.
5.
Because automatic stabilizers lower transfer payments and raise tax receipts as an economy recovers from a recession, they
A. slow down the pace of an economic recovery
B. increase the