Question 1

Recall the Application about how society will cope with increased demands for entitlement programs to
answer the following question(s) . This Application addresses the impact of increasing life expectancy and
aging populations on the costs of government entitlement programs such as Social Security, Medicare and
Medicaid, and examines several possible solutions to the potential problem.
-According to this Application, how will an increase in government spending on entitlement programs affect the macroeconomy?

Accepted Answer

A)  It will increase aggregate demand.
B)  It will decrease aggregate demand.
C)  It will increase aggregate supply.
D)  It will decrease aggregate supply.E) None of the above
F) A) and B)

Question 2

Recall the Application about the effectiveness of the Obama stimulus package on economic recovery to
answer the following question(s) .
-The Obama stimulus package was implemented to assist the economy in its recovery from recession. This package was designed to shift

Accepted Answer

A)  aggregate demand to the right.
B)  aggregate demand to the left.
C)  aggregate supply to the left.
D)  aggregate demand and aggregate supply to the left.E) None of the above
F) C) and D)

Question 3

What is meant by the term ʺoutside lagsʺ?

Accepted Answer

Outside lags refers to the tim...

Question 4

Who sets the rules for entitlements when spending is authorized under this category?

Accepted Answer

A)  the President
B)  the agency involved
C)  the Congress when it appropriates the spending
D)  each individual stateE) None of the above
F) B) and C)

Question 5

An inside lag is the time period it takes for the stabilization policies to take effect after they have been implemented.

Accepted Answer

A) True 
 B)False

Question 6

What is meant by the term ʺinside lagsʺ?

Accepted Answer

Inside lags refers to the time...

Question 7

In the United States during the 1930s

Accepted Answer

A)  government spending and taxes both increased, resulting in zero net fiscal expansion.
B)  government spending and taxes both decreased, resulting in a net fiscal contraction.
C)  government spending increased and taxes decreased, resulting in a fiscal expansion.
D)  government spending decreased and taxes increased, resulting in a fiscal contraction.E) B) and C)
F) None of the above

Question 8

What are the two basic reasons inside lags occur?

Accepted Answer

Inside lags occur because it takes time ...

Question 9

Entitlements and net interest are the _______ the U.S. federal budget.

Accepted Answer

A)  only two declining components of
B)  two fastest-growing components of
C)  two slowest-growing components of
D)  only two components with negative values inE) A) and B)
F) A) and C)

Question 10

Expansionary policies are policies designed to

Accepted Answer

A)  increase the level of real GDP.
B)  reduce the level of real GDP.
C)  decrease government spending.
D)  reduce the federal deficit.E) A) and B)
F) B) and C)

Question 11

Which component of federal spending is included in GDP?

Accepted Answer

A)  net exports
B)  transfer payments
C)  government purchases
D)  capital supplyE) All of the above
F) A) and D)

Question 12

Suppose an economy has a balanced federal budget, and a large increase in oil prices plunges the economy into a recession. Tax revenues will _______ and expenditures on transfer payments will _______, resulting in a budget _______.

Accepted Answer

A)  fall; increase; deficit
B)  increase; increase; surplus
C)  fall; fall; deficit
D)  increase; fall; surplusE) A) and D)
F) C) and D)

Question 13

Using expansionary policies to combat a recession would

Accepted Answer

A)  increase a budget deficit.
B)  increase a budget surplus.
C)  decrease discretionary spending.
D)  increase federal revenue.E) All of the above
F) C) and D)

Question 14

What is the reason that stabilization policies do not have an immediate effect on an economy?

Accepted Answer

A)  Consumers are slow to catch up on spending.
B)  There is a time lag for policies to take effect.
C)  Imports come into the country too fast.
D)  Exports often are not shipped fast enough.E) A) and B)
F) All of the above

Question 15

Estate and gift taxes account for a very small portion of total tax revenues collected by the federal government because taxes are levied only on large estates.

Accepted Answer

A) True 
 B)False

Question 16

Suppose initially the federal budget is balanced. The economy then enters a period of expansion. What is likely to happen to the federal budget?

Accepted Answer

A)  It will show a surplus.
B)  It will show a deficit.
C)  It will remain balanced.
D)  It will automatically stabilize.E) All of the above
F) B) and C)

Question 17

Corporate profits are taxed by state and local governments, but not by the federal government.

Accepted Answer

A) True 
 B)False

Question 18

Why do most economists believe that the Laffer argument does not apply to broad -based taxes?

Accepted Answer

Most economists believe that the supply ...

Question 19

The tax cuts of 2008 were valued at approximately one percent of GDP.

Accepted Answer

A) True 
 B)False

Question 20

An increased federal budget deficit resulting from a recession can actually help stabilize an economy through transfer payments because an increased budget deficit will _______ transfer payments and thereby _______ the income of some households.

Accepted Answer

A)  increase; increase
B)  increase; decrease
C)  decrease; increase
D)  decrease; decreaseE) B) and D)
F) B) and C)

Exam 15: Fiscal Policy

What is meant by the term ʺinside lagsʺ?

Correct Answer
verified
Inside lags refers to the time...
View Answer

Suppose initially the federal budget is balanced. The economy then enters a period of expansion. What is likely to happen to the federal budget?

Correct Answer
verified

An increased federal budget deficit resulting from a recession can actually help stabilize an economy through transfer payments because an increased budget deficit will _ transfer payments and thereby _ the income of some households.

Correct Answer
verified

An inside lag is the time period it takes for the stabilization policies to take effect after they have been implemented.

Correct Answer
verified

In the United States during the 1930s

Correct Answer
verified

Suppose an economy has a balanced federal budget, and a large increase in oil prices plunges the economy into a recession. Tax revenues will ___ and expenditures on transfer payments will _, resulting in a budget _____.

Correct Answer
verified

Who sets the rules for entitlements when spending is authorized under this category?

Correct Answer
verified

Why do most economists believe that the Laffer argument does not apply to broad -based taxes?

Correct Answer
verified
Most economists believe that the supply ...
View Answer

Corporate profits are taxed by state and local governments, but not by the federal government.

Correct Answer
verified

What is the reason that stabilization policies do not have an immediate effect on an economy?

Correct Answer
verified

Expansionary policies are policies designed to

Correct Answer
verified

Estate and gift taxes account for a very small portion of total tax revenues collected by the federal government because taxes are levied only on large estates.

Correct Answer
verified

Recall the Application about the effectiveness of the Obama stimulus package on economic recovery to answer the following question(s) . -The Obama stimulus package was implemented to assist the economy in its recovery from recession. This package was designed to shift

Correct Answer
verified

Entitlements and net interest are the _______ the U.S. federal budget.

Correct Answer
verified

The tax cuts of 2008 were valued at approximately one percent of GDP.

Correct Answer
verified

Correct Answer
verified

Using expansionary policies to combat a recession would

Correct Answer
verified

Which component of federal spending is included in GDP?

Correct Answer
verified

What are the two basic reasons inside lags occur?

Correct Answer
verified
Inside lags occur because it takes time ...
View Answer

What is meant by the term ʺoutside lagsʺ?

Correct Answer
verified
Outside lags refers to the tim...
View Answer

Exam 15: Fiscal Policy

What is meant by the term ʺinside lagsʺ?

Correct AnswerverifiedInside lags refers to the time...View AnswerShow Answer

Suppose initially the federal budget is balanced. The economy then enters a period of expansion. What is likely to happen to the federal budget?

Correct AnswerverifiedShow Answer

An increased federal budget deficit resulting from a recession can actually help stabilize an economy through transfer payments because an increased budget deficit will _______ transfer payments and thereby _______ the income of some households.

Correct AnswerverifiedShow Answer

An inside lag is the time period it takes for the stabilization policies to take effect after they have been implemented.

Correct AnswerverifiedShow Answer

In the United States during the 1930s

Correct AnswerverifiedShow Answer

Suppose an economy has a balanced federal budget, and a large increase in oil prices plunges the economy into a recession. Tax revenues will _______ and expenditures on transfer payments will _______, resulting in a budget _______.

Correct AnswerverifiedShow Answer

Who sets the rules for entitlements when spending is authorized under this category?

Correct AnswerverifiedShow Answer

Why do most economists believe that the Laffer argument does not apply to broad -based taxes?

Correct AnswerverifiedMost economists believe that the supply ...View AnswerShow Answer

Corporate profits are taxed by state and local governments, but not by the federal government.

Correct AnswerverifiedShow Answer

What is the reason that stabilization policies do not have an immediate effect on an economy?

Correct AnswerverifiedShow Answer

Expansionary policies are policies designed to

Correct AnswerverifiedShow Answer

Estate and gift taxes account for a very small portion of total tax revenues collected by the federal government because taxes are levied only on large estates.

Correct AnswerverifiedShow Answer

Recall the Application about the effectiveness of the Obama stimulus package on economic recovery to answer the following question(s) . -The Obama stimulus package was implemented to assist the economy in its recovery from recession. This package was designed to shift

Correct AnswerverifiedShow Answer

Entitlements and net interest are the _______ the U.S. federal budget.

Correct AnswerverifiedShow Answer

The tax cuts of 2008 were valued at approximately one percent of GDP.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Using expansionary policies to combat a recession would

Correct AnswerverifiedShow Answer

Which component of federal spending is included in GDP?

Correct AnswerverifiedShow Answer

What are the two basic reasons inside lags occur?

Correct AnswerverifiedInside lags occur because it takes time ...View AnswerShow Answer

What is meant by the term ʺoutside lagsʺ?

Correct AnswerverifiedOutside lags refers to the tim...View AnswerShow Answer

Correct Answer
verified
Inside lags refers to the time...
View Answer

Correct Answer
verified

An increased federal budget deficit resulting from a recession can actually help stabilize an economy through transfer payments because an increased budget deficit will _ transfer payments and thereby _ the income of some households.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Suppose an economy has a balanced federal budget, and a large increase in oil prices plunges the economy into a recession. Tax revenues will ___ and expenditures on transfer payments will _, resulting in a budget _____.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Most economists believe that the supply ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Inside lags occur because it takes time ...
View Answer

Correct Answer
verified
Outside lags refers to the tim...
View Answer