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Econ Test 3-11

63 Questions  I  By [email protected]

  
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1.  Refer to Exhibit 11-2. At point B, if we cut tax rates slightly, tax revenues
A.
B.
C.
D.
2.     97.   Which piece of evidence is consistent with zero crowding out?
A.
B.
C.
D.
E.
3.  If an economy has a structural surplus and a cyclical deficit, it may be concluded that
A.
B.
C.
D.
4.  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.
5.  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.
6.  The AD curve shifts to the left with a __________ in government purchases (G) or a __________ in taxes.
A.
B.
C.
D.
7.  Fiscal policy refers to
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 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.
9.  A balanced budget occurs when
A.
B.
C.
D.
10.  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.
11.  Which of the following illustrates the data lag?
A.
B.
C.
D.
12.  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.
13.  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.
14.  Refer to Exhibit 11-2. Compare points A and B. Which of the following is true?
A.
B.
C.
D.
15.  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.
16.  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.
17.  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.
18.  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.
19.  Which of the following is an example of crowding out?
A.
B.
C.
D.
20.  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.
21.  What are the two types of discretionary fiscal policy?
A.
B.
C.
D.
22.  Which of the following statements is true?
A.
B.
C.
D.
E.
23.     51.   Some of the crowding out of private expenditures may come in the form of
A.
B.
C.
D.
24.  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.
25.  The top 1% of income earners in the U.S. (those with the highest taxable incomes) pay
A.
B.
C.
D.
E.
26.  A federal budget deficit
A.
B.
C.
D.
E.
27.  Fiscal policy may not work as policymakers intend it to work because of
A.
B.
C.
D.
E.
28.  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.
29.  A "flat tax" is another term for __________ tax.
A.
B.
C.
D.
30.  Suppose Congress increases income taxes. This is an example of
A.
B.
C.
D.
31.  If there is complete crowding out, the effective value of the multiplier is
A.
B.
C.
D.
32.  Elaine's taxable income increases by $1 and her tax payment increases by $0.28. Her marginal tax rate is
A.
B.
C.
D.
33.  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.
34.  The deficit that exists when the economy operates at full employment is called the __________ deficit.
A.
B.
C.
D.
35.  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.
36.       8.   __________ flows from government to households.
A.
B.
C.
D.
37.     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.
38.  The U.S. income tax is currently a __________ tax.
A.
B.
C.
D.
39.  A curve showing the relationship between tax rates and tax revenues is called a __________ curve.
A.
B.
C.
D.
40.  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.
41.  The AD curve shifts to the left with a __________ in government purchases (G) or a __________ in taxes.
A.
B.
C.
D.
42.  That part of the deficit due to output being below Natural Real GDP is called the __________ deficit.
A.
B.
C.
D.
43.  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.
44.  If there is complete crowding out as a result of an increase in government purchases, there will be
A.
B.
C.
D.
45.  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.
46.  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.
47.     50.   The crowding-out effect suggests that
A.
B.
C.
D.
48.  Refer to Exhibit 11-2. At point A, if we cut tax rates slightly, tax revenues
A.
B.
C.
D.
49.  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.
50.  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.
51.  Which of the following illustrates the wait-and-see lag?
A.
B.
C.
D.
E.
52.  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.
53.  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.
54.  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.
55.  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.
56.  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.
57.  Suppose Congress decreases income taxes. This is an example of
A.
B.
C.
D.
58.  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.
59.     96.   Which of the following is not an example of crowding out?
A.
B.
C.
D.
E.
60.     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.
61.  The AD curve shifts to the right with a __________ in government purchases (G) or a __________ in taxes.
A.
B.
C.
D.
62.  A federal budget surplus
A.
B.
C.
D.
E.
63.       9.   An expansionary fiscal policy will
A.
B.
C.
D.
E.
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