The Ideal Quiz On Economy Ch 12 Review

22 Questions | Attempts: 1310

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Economy Quizzes & Trivia

There are different things that affect the economy, as we know it. One thing that exists in almost every economy is debt; it is used as a source of capital for different investments. Take this ideal review quiz on economy chapter 12 and get to learn more about the facts about the economy.


Questions and Answers
  • 1. 
    The Council of Economic Advisers was established to give economic advice to Congress.
    • A. 

      True

    • B. 

      False

  • 2. 
    Discretionary fiscal policy is independent of Congress and left to the discretion of state and local governments.
    • A. 

      True

    • B. 

      False

  • 3. 
    Expansionary fiscal policy during a recession or depression will create a budget deficit or ass to an existing budget deficit.
    • A. 

      True

    • B. 

      False

  • 4. 
    To increase the initial consumption by a specific amount, government must reduce taxes by more than that amount because some of the tac cut will be saved by households.
    • A. 

      True

    • B. 

      False

  • 5. 
    A reduction in taxes and an increase in government spending would be characteristic of a contractionary fiscal policy.
    • A. 

      True

    • B. 

      False

  • 6. 
    Borrowing from the public is the way a budget surplus is financed.
    • A. 

      True

    • B. 

      False

  • 7. 
    The creation of new money is more expansionary than borrowing from the public as a way of financing deficit spending.
    • A. 

      True

    • B. 

      False

  • 8. 
    Using a budget surplus to pay off a large public debtmay reduce anti-inflationary impact of the surplus.
    • A. 

      True

    • B. 

      False

  • 9. 
    The impounding of a budget surplus means that it is used for tax cuts,
    • A. 

      True

    • B. 

      False

  • 10. 
    Built-in stabilizers are not sufficiently strong to prevent recession or inflation, but they can reduce the severity.
    • A. 

      True

    • B. 

      False

  • 11. 
    The full-employment budget indicates how much government musty spend and tac if there is to be full employment in the economy.
    • A. 

      True

    • B. 

      False

  • 12. 
    The key to assessing discretionary fiscal policy is to observe the change in the full-employment budget.
    • A. 

      True

    • B. 

      False

  • 13. 
    Recognition, administrative, and operational lags in the timing of Federal fiscal policy make fiscal policies more effective in reducing the rate of inflation and decreasing unemployment in the economy.
    • A. 

      True

    • B. 

      False

  • 14. 
    State and local governments' fiscal policies have tended to assist and reinforce the efforts of the Federal government to counter recession and unemployment.
    • A. 

      True

    • B. 

      False

  • 15. 
    Economists who see evidence of a political business cycle argue the members of Congress tend to increase taxes and reduce expenditures before elections and to reduce taxes and increase expenditures after elections
    • A. 

      True

    • B. 

      False

  • 16. 
    The fiscal policies of state and local governments are frequently procyclical.
    • A. 

      True

    • B. 

      False

  • 17. 
    The crowding-out effect occurs when an expansionary fiscal policy decreases the interest rate, increases investment spending, and strengthens fiscal policy.
    • A. 

      True

    • B. 

      False

  • 18. 
    Critics contend that the crowding-out effect will be greatest when the economy is in recession.
    • A. 

      True

    • B. 

      False

  • 19. 
    With an upsloping AS, some portion of the potential effect of an expansionary fiscal policy on real GDP may be lost because of an increase in the price level.
    • A. 

      True

    • B. 

      False

  • 20. 
    For a domestic economy, there are gains for specialization and trade but also complications from the interdependency with the world economy.
    • A. 

      True

    • B. 

      False

  • 21. 
    A net export effect may partially offset an expansionary fiscal policy.
    • A. 

      True

    • B. 

      False

  • 22. 
    Supply-side economists maintain that reductions in tax rates decrease AS and are, therefore, inflationary.
    • A. 

      True

    • B. 

      False

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