Econ: Ch. 10

18 Questions | Total Attempts: 120

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Economics Quizzes & Trivia

Economics. Chapter 10.


Questions and Answers
  • 1. 
    Government policies that increase aggregate demand are called:
    • A. 

      Economic policies.

    • B. 

      Fiscal policies.

    • C. 

      Expansionary policies.

    • D. 

      Forward-looking policies.

  • 2. 
    Refer to the figure below. Which of the graphs is an example of stabilization polices, or actions to move the economy closer to full employment or potential output.
    • A. 

      The graph on the left.

    • B. 

      The graph on the right.

    • C. 

      Both graphs.

    • D. 

      Neither graph.

  • 3. 
    Refer to the diagram below. Which of the policies in the diagram is an ill-timed policy?
    • A. 

      A.

    • B. 

      B.

    • C. 

      Both A and B.

    • D. 

      Neither A nor B.

  • 4. 
    To replicate the behavior of the economy mathematically and statistically and to assist in developing economic forecasts, economists use:
    • A. 

      Economic engineering.

    • B. 

      New growth theory.

    • C. 

      Econometric models.

    • D. 

      Fiscal theory.

  • 5. 
    Fill in the blanks. In 2005, total federal spending was ________ and total spending was ________. $962 billion; 927 billion
    • A. 

      $962 billion; 927 billion

    • B. 

      $2,142 billion; $2,473 billion

    • C. 

      $1,329 billion; $794 billion

    • D. 

      A smaller fraction of GDP; a larger fraction of GDP

  • 6. 
    What type of outlay is defense spending?
    • A. 

      A part of discretionary spending.

    • B. 

      An entitlement.

    • C. 

      A part of mandatory spending.

    • D. 

      A part of automatic spending.

  • 7. 
    Which of the following is the largest component of federal spending?
    • A. 

      Defense.

    • B. 

      Entitlements and mandatory spending.

    • C. 

      Discretionary spending.

    • D. 

      Means-tested spending.

  • 8. 
    Some social programs are means-tested, which means that:
    • A. 

      The spending on those programs has been matched by taxes that raise the revenue necessary to run them.

    • B. 

      They are partly based on the income of the recipient.

    • C. 

      The government has tested the program and knows it will accomplish its goals.

    • D. 

      The government only carries out the spending if its revenue is sufficient; in other words, it is not allowed to borrow money to fund these programs

  • 9. 
    Federal government revenue, as a percent of GDP, was approximately 17.5% in 2005. What percent of GDP was the revenue collected from corporations?
    • A. 

      Almost the entire 17.5%.

    • B. 

      7.6%.

    • C. 

      6.5%.

    • D. 

      2.2%.

  • 10. 
    When is the government able to buy back some of the bonds previously sold to the public?
    • A. 

      When it runs a budget deficit.

    • B. 

      When it runs a budget surplus.

    • C. 

      When it runs a budget balance.

    • D. 

      None of the above. Such purchase is impossible.

  • 11. 
    When is it a good idea to run a government budget deficit in order to offset the adverse effect of the business cycle and thus help to stabilize the economy?
    • A. 

      During an expansion.

    • B. 

      During a recession.

    • C. 

      During a boom.

    • D. 

      At any moment throughout the business cycle.

  • 12. 
    The crowding out effect that can occur in the long run as a result of running budget deficits is an illustration of a key principle of economics. Which one?
    • A. 

      The principle of opportunity cost.

    • B. 

      The real-nominal principle.

    • C. 

      The principle of diminishing returns.

    • D. 

      The principle of voluntary exchange.

    • E. 

      The marginal principle.

  • 13. 
    Supply-side economics is a school of economic thought that emphasizes:
    • A. 

      The negative impacts of a budget deficit on the economy as a whole.

    • B. 

      The role played by AD in determining the level of AS.

    • C. 

      The role taxes play in the supply of output in the economy.

    • D. 

      The impact of government spending on consumption.

  • 14. 
    When the economy is in a recession, the government should:
    • A. 

      Reduce expenditures and leave taxes constant in order to stimulate aggregate demand.

    • B. 

      Increase government purchases or decrease taxes in order to increase aggregate demand.

    • C. 

      Decrease government purchases or increase taxes in order to decrease aggregate supply.

    • D. 

      Change spending and taxation but not aggregate demand or aggregate supply.

  • 15. 
    Changes in taxes and spending that happen without actions by the government are called:
    • A. 

      Discretionary fiscal policy changes.

    • B. 

      Automatic stabilizers.

    • C. 

      Discretionary stabilizers.

    • D. 

      Autonomous fiscal expenditures.

  • 16. 
    When did the United States government start to embrace an active fiscal policy?
    • A. 

      During the Great Depression.

    • B. 

      During the Kennedy administration.

    • C. 

      During the Vietnam War Era.

    • D. 

      During the Reagan administration.

  • 17. 
    The tax cuts enacted during 1981 were justified on the basis of:
    • A. 

      Slowing the economy down.

    • B. 

      Increasing the supply of output.

    • C. 

      Increasing the demand for goods and services.

    • D. 

      Helping households go through a boom period of economic activity.

  • 18. 
    Fill in the blanks. The prospect of future deficits ___________ the ability of the U.S. government to conduct expansionary fiscal policy in the near future.
    • A. 

      Enhances

    • B. 

      Sharply limits

    • C. 

      Has no effect on

    • D. 

      May enhance or limit