Trivia Quiz On Balanced Budget

252 Questions | Total Attempts: 480

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Trivia Quiz On Balanced Budget

Welcome to the trivia quiz on a balanced budget. When it comes to managing one's finances, it is important to have a basic budget where you have an estimate of how much expenses you will have and what amount of money you will allocate to it. This is done through different types of budgets. Take the quiz and see how much you understand the balanced budget.


Questions and Answers
  • 1. 
    A balanced budget occurs when
    • A. 

      The national debt is reduced to zero dollars.

    • B. 

      A budget deficit during one year is matched by a budget surplus in the next year.

    • C. 

      Transfer payments equal tax revenues.

    • D. 

      Government expenditures equal tax revenues.

  • 2. 
    A federal budget surplus
    • A. 

      Occurs when government expenditures exceed tax revenues.

    • B. 

      Occurs when tax revenues exceed government expenditures.

    • C. 

      Occurs when tax revenues exceed transfer payments.

    • D. 

      Occurs when monetary policy works in the opposite direction of fiscal policy.

    • E. 

      Is an impossibility.

  • 3. 
    A federal budget deficit
    • A. 

      Occurs when government expenditures exceed tax revenues.

    • B. 

      Occurs when tax revenues exceed government expenditures.

    • C. 

      Occurs when transfer payments exceed tax revenues.

    • D. 

      Will always result when Congress and the president cannot agree on expenditures.

    • E. 

      Occurs when monetary policy works in the opposite direction of fiscal policy.

  • 4. 
    Fiscal policy refers to
    • A. 

      Efforts to balance a government's budget.

    • B. 

      Changes in the money supply to achieve particular economic goals.

    • C. 

      Changes in government expenditures and taxation to achieve particular economic goals.

    • D. 

      The change in private expenditures that occurs as a consequence of changes in government spending.

  • 5. 
    Suppose Congress increases income taxes. This is an example of
    • A. 

      Expansionary fiscal policy.

    • B. 

      Expansionary monetary policy.

    • C. 

      Contractionary fiscal policy.

    • D. 

      Contractionary monetary policy.

  • 6. 
    Suppose Congress decreases income taxes. This is an example of
    • A. 

      Expansionary fiscal policy.

    • B. 

      Expansionary monetary policy.

    • C. 

      Contractionary fiscal policy.

    • D. 

      Contractionary monetary policy.

  • 7. 
    Expansionary fiscal policy actions include __________ government spending and/or __________ taxes, while contractionary fiscal policy actions include __________ government spending and/or __________ taxes.
    • A. 

      Increasing; increasing; decreasing; decreasing

    • B. 

      Decreasing; decreasing; increasing; increasing

    • C. 

      Increasing; decreasing; increasing; decreasing

    • D. 

      Decreasing; increasing; increasing; decreasing

    • E. 

      Increasing; decreasing; decreasing; increasing

  • 8. 
    Which of the following is an example of crowding out?
    • A. 

      A decrease in the rate of growth of the stock of money decreases GDP.

    • B. 

      A deficit causes an increase in interest rates, which causes a decrease in investment spending.

    • C. 

      An increase in tariffs causes a decrease in imports.

    • D. 

      A decrease in government housing subsidies causes an increase in private spending on housing.

  • 9. 
    If there is complete crowding out as a result of an increase in government purchases, there will be
    • A. 

      A decrease in aggregate demand.

    • B. 

      No change in aggregate demand.

    • C. 

      An increase in aggregate demand.

    • D. 

      A downward movement along the aggregate demand curve.

  • 10. 
    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. 

      Incomplete crowding out.

    • B. 

      Complete crowding out.

    • C. 

      Zero crowding out.

    • D. 

      A and c

    • E. 

      None of the above

  • 11. 
    The AD curve shifts to the left with a __________ in government purchases (G) or a __________ in taxes.
    • A. 

      Rise; rise

    • B. 

      Rise; fall

    • C. 

      Fall; rise

    • D. 

      Fall; fall

  • 12. 
    The AD curve shifts to the right with a __________ in government purchases (G) or a __________ in taxes.
    • A. 

      Rise; rise

    • B. 

      Rise; fall

    • C. 

      Fall; rise

    • D. 

      Fall; fall

  • 13. 
    Fiscal policy may not work as policymakers intend it to work because of
    • A. 

      Crowding out.

    • B. 

      Lags

    • C. 

      The position of the physical production possibilities frontier.

    • D. 

      A and b

    • E. 

      A, b, and c

  • 14. 
    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. 

      The government's actions will have their intended effect.

    • B. 

      The government's actions will cause businesses to become more optimistic about the economy, and they will increase their output even more than the government had intended.

    • C. 

      The government's actions will raise interest rates, causing decreased investment and consumption, and the economy will not expand as much as the government had intended.

    • D. 

      This is a trick question, because the federal government is required by law to increase taxes by the same amount as it increases expenditures.

  • 15. 
    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. 

      Incomplete crowding out.

    • B. 

      Complete crowding out.

    • C. 

      Zero crowding out.

    • D. 

      A and c

    • E. 

      None of the above

  • 16. 
    The AD curve shifts to the left with a __________ in government purchases (G) or a __________ in taxes.
    • A. 

      Rise; rise

    • B. 

      Rise; fall

    • C. 

      Fall; rise

    • D. 

      Fall; fall

  • 17. 
    Which of the following illustrates the data lag?
    • A. 

      The economy turns down on January 8, 2006, but policymakers do not figure this out until April 19, 2006.

    • B. 

      Policymakers wait and see what is really going on with the economy.

    • C. 

      Policymakers implement policy X on September 12, 2006, but the effects are not felt until six months later.

    • D. 

      The data lag is illustrated equally well by a, b, and c.

  • 18. 
    Which of the following illustrates the wait-and-see lag?
    • A. 

      Policymakers believe an economic downturn has occurred, but they decide not to take action until they are sure.

    • B. 

      Policymakers are in the process of proposing policy measures to deal with the current economic slowdown.

    • C. 

      Policymakers first learn of the recession when it is five months old.

    • D. 

      Policymakers implement policy X, but it will be a few months before it starts working.

    • E. 

      Policymakers agree to policy X, but it will be at least two months before the policy is implemented.

  • 19. 
    The lag between an increase in government spending and the impact of this increased spending on the economy is called the __________ lag.
    • A. 

      Effectiveness

    • B. 

      Transmission

    • C. 

      Legislative

    • D. 

      Data

  • 20. 
    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. 

      Data

    • B. 

      Wait-and-see

    • C. 

      Legislative

    • D. 

      Transmission

  • 21. 
    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. 

      Average

    • B. 

      Fixed

    • C. 

      Total

    • D. 

      Marginal

  • 22. 
    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. 

      $180 $18,000 $180

    • B. 

      $2,000

    • C. 

      $18,000

    • D. 

      $1,800

  • 23. 
    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. 

      $1,345

    • B. 

      $1,950

    • C. 

      $3,900

    • D. 

      $2,980

  • 24. 
    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. 

      $3,760

    • B. 

      $8,500

    • C. 

      $5,900

    • D. 

      $6,840

  • 25. 
    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. 

      $7,600.

    • B. 

      $10,200.

    • C. 

      $8,780.

    • D. 

      $15,300.