Question 1

The more progressive the tax system, the

Accepted Answer

A)  less is the built-in stability for the economy.
B)  greater is the built-in stability for the economy.
C)  less is the effect of crowding out on the economy.
D)  greater is the severity of business fluctuations on the economy.E) A) and B)
F) C) and D)

Question 2

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

Accepted Answer

A)  26 percent
B)  71 percent
C)  41 percent
D)  34 percentE) B) and D)
F) B) and C)

Question 3

The goal of expansionary fiscal policy is to rein in inflation.

Accepted Answer

A) True 
 B)False

Question 4

In Year 1, the actual budget deficit was $150 billion and the cyclically adjusted deficit was $125 billion.In Year 2, the actual budget deficit was $130 billion and the cyclically adjusted deficit was $125 billion.It can be concluded that from Year 1 to Year 2,

Accepted Answer

A)  real GDP decreased.
B)  real GDP increased.
C)  full employment was attained.
D)  fiscal policy became less expansionary.E) All of the above
F) C) and D)

Question 5

As the economy declines into recession, the collection of personal income tax revenues automatically falls.This phenomenon best illustrates how a progressive income-tax system

Accepted Answer

A)  increases crowding out in the economy.
B)  decreases real interest rates in the economy.
C)  offsets the timing problem for fiscal policy.
D)  serves as an automatic stabilizer for the economy.E) B) and D)
F) None of the above

Question 6

More than half of the U.S.public debt is owed to Americans.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following fiscal policy actions is most likely to increase aggregate supply?

Accepted Answer

A)  an increase in personal income tax rates
B)  a reduction in interest rates that encourages consumers to purchase more durable goods
C)  an increase in transfer payments to unemployed workers
D)  an increase in government spending on infrastructure that increases private sector productivityE) A) and C)
F) B) and C)

Question 8

From 1995 to 2001, the U.S.public debt relative to GDP

Accepted Answer

A)  increased, and fell since then.
B)  decreased, and increased since then.
C)  increased steadily and continued to increase since then.
D)  was roughly constant, but has increased since.E) C) and D)
F) None of the above

Question 9

Which of the following fiscal policy changes would be the most contractionary?

Accepted Answer

A)  a $40 billion increase in taxes
B)  a $10 billion increase in taxes and a $30 billion cut in government spending
C)  a $20 billion increase in taxes and a $20 billion cut in government spending
D)  a $30 billion increase in taxes and a $10 billion cut in government spendingE) A) and D)
F) All of the above

Question 10

Assume that if there were no crowding out, an increase in government spending would increase GDP by $100 billion.On the other hand, if there had been full crowding out, then GDP would have

Accepted Answer

A)  increased by more than $100 billion.
B)  increased by less than $100 billion.
C)  increased by $100 billion.
D)  not increased.E) B) and C)
F) A) and C)

Exam 33: Fiscal Policy, Deficits, and Debt

Which of the following fiscal policy actions is most likely to increase aggregate supply?

Correct Answer
verified

As the economy declines into recession, the collection of personal income tax revenues automatically falls.This phenomenon best illustrates how a progressive income-tax system

Correct Answer
verified

Which of the following fiscal policy changes would be the most contractionary?

Correct Answer
verified

The more progressive the tax system, the

Correct Answer
verified

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

Correct Answer
verified

From 1995 to 2001, the U.S.public debt relative to GDP

Correct Answer
verified

Assume that if there were no crowding out, an increase in government spending would increase GDP by $100 billion.On the other hand, if there had been full crowding out, then GDP would have

Correct Answer
verified

The goal of expansionary fiscal policy is to rein in inflation.

Correct Answer
verified

More than half of the U.S.public debt is owed to Americans.

Correct Answer
verified

In Year 1, the actual budget deficit was $150 billion and the cyclically adjusted deficit was $125 billion.In Year 2, the actual budget deficit was $130 billion and the cyclically adjusted deficit was $125 billion.It can be concluded that from Year 1 to Year 2,

Correct Answer
verified

Exam 33: Fiscal Policy, Deficits, and Debt

Which of the following fiscal policy actions is most likely to increase aggregate supply?

Correct AnswerverifiedShow Answer

As the economy declines into recession, the collection of personal income tax revenues automatically falls.This phenomenon best illustrates how a progressive income-tax system

Correct AnswerverifiedShow Answer

Which of the following fiscal policy changes would be the most contractionary?

Correct AnswerverifiedShow Answer

The more progressive the tax system, the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

From 1995 to 2001, the U.S.public debt relative to GDP

Correct AnswerverifiedShow Answer

Assume that if there were no crowding out, an increase in government spending would increase GDP by $100 billion.On the other hand, if there had been full crowding out, then GDP would have

Correct AnswerverifiedShow Answer

The goal of expansionary fiscal policy is to rein in inflation.

Correct AnswerverifiedShow Answer

More than half of the U.S.public debt is owed to Americans.

Correct AnswerverifiedShow Answer

In Year 1, the actual budget deficit was $150 billion and the cyclically adjusted deficit was $125 billion.In Year 2, the actual budget deficit was $130 billion and the cyclically adjusted deficit was $125 billion.It can be concluded that from Year 1 to Year 2,

Correct AnswerverifiedShow Answer

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