The Ideal Quiz On Economy Ch 12 Review

22 Questions | By Ecofanics | Updated: Mar 19, 2022 | Attempts: 1310

Questions

Settings

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