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Econ Test 3-11

63 Questions  I  By [email protected]
Econ test 3-11

  
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1.  Suppose Congress decreases income taxes. This is an example of
A.
B.
C.
D.
2.  If the economy is on the downward-sloping portion of the Laffer curve, a(an) __________ in tax rates will __________ tax revenues.
A.
B.
C.
D.
E.
3.  If an individual pays an additional $0.30 in taxes as a result of a $1.00 increase in income, that individual has a(n) __________ tax rate of 30 percent.
A.
B.
C.
D.
4.  Suppose government expenditures = $1,400, taxes are a flat 18 percent of GDP, GDP = $6,200, and full-employment GDP = $7,000. What is the structural deficit?
A.
B.
C.
D.
5.  That part of the deficit due to output being below Natural Real GDP is called the __________ deficit.
A.
B.
C.
D.
6.  If an economy has a structural surplus and a cyclical deficit, it may be concluded that
A.
B.
C.
D.
7.       8.   __________ flows from government to households.
A.
B.
C.
D.
8.  Taxable Income Taxes $0 - $23,000 9% of taxable income $23,001 - $42,000 $2,070 + 13% of everything over $23,000 $42,001 - $69,000 $4,540 + 17% of everything over $42,000 Use the information provided in Exhibit 11-4.  What is the marginal tax rate on the 23,000th dollar earned?
A.
B.
C.
D.
9.  If an individual pays an additional $0.30 in taxes as a result of a $1.00 increase in income, that individual has a(n) __________ tax rate of 30 percent.
A.
B.
C.
D.
10.  Senator Smith proposes that the income tax structure be revised to have two tax rates. The first, 16 percent, applies to persons whose income is between $0 and $40,000 a year. The second, 23 percent, applies to persons whose income is more than $40,000 a year. This is a
A.
B.
C.
D.
11.  Suppose that government expenditures are currently $700 billion and tax revenues are currently $550 billion.  Assume further that the government estimates that if the economy were operating at full employment government expenditures would only be $685 billion and tax revenues would be $600 billion.  In this case, the structural deficit is _____________ billion.
A.
B.
C.
D.
12.  The U.S. income tax is currently a __________ tax.
A.
B.
C.
D.
13.  Taxable Income Taxes $0 - $23,000 9% of taxable income $23,001 - $42,000 $2,070 + 13% of everything over $23,000 $42,001 - $69,000 $4,540 + 17% of everything over $42,000 Refer to Exhibit 11-4.  If a person’s taxable income is $20,000, how much does he pay in taxes?
A.
B.
C.
D.
14.  Suppose government expenditures = $1,400, taxes are a flat 18 percent of GDP, GDP = $6,200, and full-employment GDP = $7,000. What is the budget deficit?
A.
B.
C.
D.
15.       9.   An expansionary fiscal policy will
A.
B.
C.
D.
E.
16.  Suppose that government expenditures are currently $700 billion and tax revenues are currently $550 billion.  Assume further that the government estimates that if the economy were operating at full employment government expenditures would only be $685 billion and tax revenues would be $600 billion.  In this case, the total budget deficit is _____________ billion.
A.
B.
C.
D.
17.  The period that elapses between the passage of legislation reducing taxes and the time the tax cut is put into effect is called the __________ lag.
A.
B.
C.
D.
18.     50.   The crowding-out effect suggests that
A.
B.
C.
D.
19.  Expansionary fiscal policy actions include __________ government spending and/or __________ taxes, while contractionary fiscal policy actions include __________ government spending and/or __________ taxes.
A.
B.
C.
D.
E.
20.  If there is complete crowding out, the effective value of the multiplier is
A.
B.
C.
D.
21.  If there is complete crowding out as a result of an increase in government purchases, there will be
A.
B.
C.
D.
22.     92.   The federal budget is balanced and the economy is on the upward-sloping portion of the Laffer curve. Then, tax rates are cut and government purchases are increased. Is a budget deficit inevitable?
A.
B.
C.
D.
23.     96.   Which of the following is not an example of crowding out?
A.
B.
C.
D.
E.
24.  Refer to Exhibit 11-1. The economy is currently at point 1. In this situation, Keynesian economists would most likely propose
A.
B.
C.
D.
25.  A federal budget deficit
A.
B.
C.
D.
E.
26.     97.   Which piece of evidence is consistent with zero crowding out?
A.
B.
C.
D.
E.
27.  Suppose the government increases spending on public education by $700 million and individual spending on private education drops by $700 million. This is an example of
A.
B.
C.
D.
E.
28.  A balanced budget occurs when
A.
B.
C.
D.
29.  Refer to Exhibit 11-2. At point A, if we cut tax rates slightly, tax revenues
A.
B.
C.
D.
30.  Fiscal policy may not work as policymakers intend it to work because of
A.
B.
C.
D.
E.
31.     94.   Both Jones and Smith agree that the economy is in a recessionary gap. Jones proposes a tax cut. Smith couldn't agree more. Jones says that lower taxes will result in higher Real GDP. Again, Smith couldn't agree more. It follows that
A.
B.
C.
D.
E.
32.  Taxable Income Taxes $0 - $23,000 9% of taxable income $23,001 - $42,000 $2,070 + 13% of everything over $23,000 $42,001 - $69,000 $4,540 + 17% of everything over $42,000 Refer to Exhibit 11-4.  If a person’s taxable income is $60,000, how much does he pay in taxes?
A.
B.
C.
D.
33.  Refer to Exhibit 11-2. At point B, if we cut tax rates slightly, tax revenues
A.
B.
C.
D.
34.  The AD curve shifts to the left with a __________ in government purchases (G) or a __________ in taxes.
A.
B.
C.
D.
35.  A curve showing the relationship between tax rates and tax revenues is called a __________ curve.
A.
B.
C.
D.
36.  Refer to Exhibit 11-1. The economy is currently at point 1. Suppose the federal government increases purchases and there is complete crowding out. As a result, the aggregate demand (AD) curve in the exhibit
A.
B.
C.
D.
37.  The period that elapses between the passage of legislation reducing taxes and the time the tax cut is put into effect is called the __________ lag.
A.
B.
C.
D.
38.  Which of the following illustrates the wait-and-see lag?
A.
B.
C.
D.
E.
39.  Which of the following is an example of crowding out?
A.
B.
C.
D.
40.  Taxable Income Taxes $0 - $23,000 9% of taxable income $23,001 - $42,000 $2,070 + 13% of everything over $23,000 $42,001 - $69,000 $4,540 + 17% of everything over $42,000 Refer to Exhibit 11-4.  If a person’s taxable income is $30,000, how much does he pay in taxes?
A.
B.
C.
D.
41.  If the structural deficit is $330 billion and the cyclical deficit is $80 billion, it follows that the __________ is __________ billion.
A.
B.
C.
D.
E.
42.  Suppose the government increases spending on public education by $700 million and individual spending on private education drops by $700 million. This is an example of
A.
B.
C.
D.
E.
43.  A federal budget surplus
A.
B.
C.
D.
E.
44.  Suppose the government attempts to stimulate the economy by increasing purchases without increasing taxes. Which of the following statements is most likely to be accepted by someone who believes in crowding out?
A.
B.
C.
D.
45.  110.   A taxpayer pays __________ tax rate on additional income if the income tax structure is progressive, __________ tax rate on additional income if the income tax structure is proportional, and __________ tax rate on additional income if the income tax structure is regressive.
A.
B.
C.
D.
E.
46.  Suppose aggregate demand is too high to bring about the Natural Real GDP level. A Keynesian policy prescription would call for a(n) _____________________ to close this inflationary gap.
A.
B.
C.
D.
E.
47.  The AD curve shifts to the left with a __________ in government purchases (G) or a __________ in taxes.
A.
B.
C.
D.
48.  Which of the following illustrates the data lag?
A.
B.
C.
D.
49.  The deficit that exists when the economy operates at full employment is called the __________ deficit.
A.
B.
C.
D.
50.  Fiscal policy refers to
A.
B.
C.
D.
51.  Suppose government expenditures = $1,400, taxes are a flat 18 percent of GDP, GDP = $6,200, and full-employment GDP = $7,000. What is the cyclical deficit?
A.
B.
C.
D.
52.  The AD curve shifts to the right with a __________ in government purchases (G) or a __________ in taxes.
A.
B.
C.
D.
53.  Jim and Janet each buy a computer and each pays $200 in sales taxes. Jim's annual income is $40,000 and Janet's annual income is $60,000. The sales tax is
A.
B.
C.
D.
54.  The lag between an increase in government spending and the impact of this increased spending on the economy is called the __________ lag.
A.
B.
C.
D.
55.  Refer to Exhibit 11-2. Compare points A and B. Which of the following is true?
A.
B.
C.
D.
56.  The top 1% of income earners in the U.S. (those with the highest taxable incomes) pay
A.
B.
C.
D.
E.
57.  Suppose Congress increases income taxes. This is an example of
A.
B.
C.
D.
58.     51.   Some of the crowding out of private expenditures may come in the form of
A.
B.
C.
D.
59.  Taxable Income Taxes $0 - $23,000 9% of taxable income $23,001 - $42,000 $2,070 + 13% of everything over $23,000 $42,001 - $69,000 $4,540 + 17% of everything over $42,000 Refer to Exhibit 11-4.  If a person’s taxable income is $50,000, how much does he pay in taxes?
A.
B.
C.
D.
60.  Which of the following statements is true?
A.
B.
C.
D.
E.
61.  What are the two types of discretionary fiscal policy?
A.
B.
C.
D.
62.  A "flat tax" is another term for __________ tax.
A.
B.
C.
D.
63.  Elaine's taxable income increases by $1 and her tax payment increases by $0.28. Her marginal tax rate is
A.
B.
C.
D.
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