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Macroeconomics,lOe(Parkin)

Chapter13FiscalPolicy

1TheFederalBudget

1)PriortotheGreatDepression,thepurposeofthefederalbudgetwasto.

A)stabilizetheeconomy

B)financetheactivitiesofthegovernment

C)maintainlowinterestrates

D)decreaseunemployment

Answer:B

Topic:TheFederalBudget

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

2)TheuseoftheU.S.federalbudgettohelpstabilizetheeconomygrewinreactiontothe

andisknownas.

A)stagflationofthe1970s;fiscalpolicy

B)GreatDepressionofthe1930s;fiscalpolicy

C)stagflationofthe1970s;governmentpolicy

D)GreatDepressionofthe1930s;monetarypolicy

Answer:B

Topic:TheFederalBudget

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

3)Fiscalpolicyincludes

A)onlydecisionsrelatedtogovernmentexpenditureongoodsandservices.

B)onlydecisionsrelatedtogovernmentexpenditureongoodsandservicesandthevalueof

transferpayments.

C)onlydecisionsrelatedtothevalueoftransferpaymentsandtaxrevenue.

D)decisionsrelatedtogovernmentexpenditureongoodsandservices,thevalueoftransfer

payments,andtaxrevenue.

Answer:D

Topic:FiscalPolicy

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

4)Fiscalpolicyinvolves

A)theuseofinterestratestoinfluencethelevelofGDP.

B)theuseoftaxandspendingpoliciesbythegovernment.

C)decreasingtheroleoftheFederalReserveintheeverydaylifeoftheeconomy.

D)theuseoftaxandmoneypoliciesbygovernmenttoinfluencethelevelofinterestrates.

Answer:B

Topic:FiscalPolicy

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

5)Fiscalpolicy

A)isenactedbytheFederalReserve.

B)involveschanginginterestrates.

C)involveschangingtaxesandgovernmentspending.

D)involveschangingthemoneysupply.

Answer:C

Topic:FiscalPolicy

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

6)FiscalpolicyattemptstoachieveallofthefollowingobjectivesEXCEPT.

A)astablemoneysupply

B)pricelevelstability

C)fullemployment

D)sustainedeconomicgrowth

Answer:A

Topic:FiscalPolicy

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

7)Changesinwhichofthefollowingisincludedaspartoffiscalpolicy?

A)thequantityofmoney

B)thelevelofinterestrates

C)monetarypolicy

D)taxrates

Answer:D

Topic:FiscalPolicy

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

8)AllofthefollowingarepartoffiscalpolicyEXCEPT

A)settingtaxrates.

B)settinggovernmentspending.

C)choosingthesizeofthegovernmentdeficit.

D)controllingthemoneysupply.

Answer:D

Topic:FiscalPolicy

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

9)Thebudgetprocessincludesthe

A)PresidentproposingandCongresspassingthebudget.

B)PresidentpassingthebudgetasproposedbyCongress.

C)HouseofRepresentativesproposingandtheSenatepassingthebudget.

D)SenateproposingandtheHouseofRepresentativespassingthebudget.

Answer:A

Topic:TheFederalBudget

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

10)Whichbranchesofthegovernmentplayaroleintheenactingthefederalbudget?

I.thePresident.

II.theHouseofRepresentatives.

III.theSenate.

A)IandII

B)IIandIII

C)I,IIandIII

D)I

Answer:C

Topic:TheFederalBudget

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

11)WhichofthefollowinggovernmentbodiesdoesNOTparticipatedirectlyinformulatingU.S.

fiscalpolicy?

A)thePresidentandhiscabinet

B)theFederalReserveBoard

C)theHouseofRepresentatives

D)theSenate

Answer:B

Topic:TheFederalBudget

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

12)ThepurposeoftheEmploymentActof1946wasto

A)establishgoalsforthefederalgovernmentthatwouldpromotemaximumemployment,

purchasingpower,andproduction.

B)establishanunemploymentcompensationsystem.

C)setuptheFederalReserveSystem.

D)settargetsfortheunemploymentratetobeachievedbythepresident.

Answer:A

Topic:TheEmploymentActof1946

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

13)TheEmploymentActof1946madeittheresponsibilityofthefederalgovernmentto

A)balanceitsbudgetbecausethatpolicywouldcreatethemaximumlevelofemployment.

B)promotemaximumemployment.

C)providefullemploymentandastablebalanceofpayments.

D)improvethedistributionofincome.

Answer:B

Topic:TheEmploymentActof1946

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

14)TheEmploymentActof1946statesthatitistheresponsibilityofthefederalgovernmentto

A)promotefullemployment.

B)promoteeconomicequality.

C)maintaintheinflationrateatbelow10percentperyear.

D)Alloftheaboveanswersarecorrect.

Answer:A

Topic:TheEmploymentActof1946

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

15)TheCouncilofEconomicAdvisers

A)proposesthepresident'sbudgeteachyear.

B)approvesfiscalpolicychanges.

C)helpsthepresidentandthepublicstayinformedaboutthestateoftheeconomy.

D)helpsthepresidentmakechangesinmonetarypolicy.

Answer:C

Topic:CouncilofEconomicAdvisers

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

16)TheCouncilofEconomicAdvisorsadvisesthe

A)President.

B)Congress.

C)Senate.

D)HouseofRepresentatives.

Answer:A

Topic:CouncilofEconomicAdvisers

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

17)Thelargestsourceofgovernmentrevenuesis.

A)personalincometaxes

B)indirecttaxes

C)corporateincometaxes

D)socialsecuritytaxes

Answer:A

Topic:TaxRevenues

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

18)Whatisthelargestsourceofrevenueforthefederalgovernment?

A)SocialSecuritytaxes

B)corporateincometaxes

C)personalincometaxes

D)salestax

Answer:C

Topic:TaxRevenues

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

19)Whichofthefollowingisthelargestsourceoffederalgovernmentrevenue?

A)corporateincometaxes

B)SocialSecuritytaxes

C)personalincometaxes

D)borrowing

Answer:C

Topic:TaxRevenues

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

20)Thegovernmentreceivestaxrevenuesfromseveralsources.Rankthefollowingsources

fromlargesttothesmallest.

I.corporateincometaxes

II.personalincometaxes

III.SocialSecuritytaxes

A)I,II,III

B)II,III,I

C)I,III,II

D)III,II,I

Answer:B

Topic:TaxRevenues

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

21)WhichofthefollowingisNOTarevenuesourcefortheFederalgovernment?

A)personalincometaxes

B)indirecttaxes

C)interestoncorporatebondholdings

D)socialsecuritytaxes

Answer:C

Topic:TaxRevenues

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

22)Thelargestitemofgovernmentoutlaysis.

A)debtinterest

B)transferpayments

C)expendituresongoodsandservices

D)debtreduction

Answer:B

Topic:TheFederalBudget

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

23)ExpendituressuchasSocialSecuritybenefits,farmsubsidiesandgrantsareconsidered

A)expendituresongoodsandservices

B)transferpayments

C)debtreduction

D)debtinterest

Answer:B

Topic:TheFederalBudget

Skill:Recognition

Questionhistory:New10thedition

AACSB:ReflectiveThinking

24)SocialSecuritybenefitsandexpendituresonMedicareandMedicaidareclassifiedas

A)debtinterest.

B)purchasesofgoodsandservices.

C)productionofgoodsandservices.

D)transferpayments.

Answer:D

Topic:GovernmentExpenditures

Skill:Conceptual

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

25)Rankthefollowingfederalgovernmentoutlaysfromthelargesttothesmallest.

I.debtinterest

ILtransferpayments

III.expenditureongoodsandservices

A)i,ii,in

B)III,II,I

C)III,I,II

D)II,III,I

Answer:D

Topic:GovernmentExpenditures

Skill:Conceptual

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

26)WhichofthefollowingisNOTagovernmentoutlay?

A)transferpayments

B)expenditureongoodsandservices

C)debtinterestonthegovernment'sdebt

D)purchasesofforeignbonds

Answer:D

Topic:GovernmentExpenditures

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

27)AllofthefollowingaregovernmentoutlaysEXCEPT

A)interestonthegovernment'sdebt.

B)transferpayments.

C)purchasesofcorporatebonds.

D)expenditureongoodsandservices.

Answer:C

Topic:GovernmentExpenditures

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

28)FederalgovernmentoutlaysasapercentageofGDPareapproximately

A)10percent.

B)25percent.

C)5()percent.

D)66percent.

Answer:B

Topic:GovernmentExpenditures

Skill:Recognition

Questionhistory:Modified10thedition

AACSB:ReflectiveThinking

Dollars

Component(billion)

Personalincometaxes500

Socialsecuritytaxes400

Corporateincometaxes150

Indirecttaxes75

Transferpayments1,200

Expenditureongoodsand

services225

Debtinterest75

29)Thetableabovehasdataforacountry*sgovernmentbudget.Thecountryhasgovernment

revenuesofbillion.

A)$900

B)$1125

C)$725

D)$1700

Answer:B

Topic:TaxRevenues

Skill:Analytical

Questionhistory:Modified10thedition

AACSB:AnalyticalSkills

30)Thetableabovehasdataforacountry'sgovernmentbudget.Governmentoutlaysforthe

economyequalbillion.

A)$1200

B)$1275

C)$1500

D)$1425

Answer:C

Topic:GovernmentExpenditures

Skill:Analytical

Questionhistory:Modified10thedition

AACSB:AnalyticalSkills

31)Thetableabovehasdataforacountry'sgovernmentbudget.Thedatashowthegovernment

isrunningabillion.

A)budgetsurplusof$300

B)budgetdeficitof$375

C)budgetdeficitof$550

D)budgetsurplusof$650

Answer:B

Topic:BudgetSurplusandDeficit

Skill:Analytical

Questionhistory:Modified10thedition

AACSB:AnalyticalSkills

32)Thelargestsourceofrevenueforthefederalgovernmentisandthelargestoutlay

isfor.

A)corporatetaxes;SocialSecurity

B)personalincometaxes;Medicare

C)personalincometaxes;interestonnationaldebt

D)personalincometaxes;transferpayments

Answer:D

Topic:GovernmentRevenuesandExpenditures

Skill:Conceptual

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

33)Thegovernment'sbudgetdeficitorsurplusequalsthe

A)changeinoutlaysdividedbychangeinrevenue.

B)averageoutlaydividedbyaveragerevenue.

C)changeinrevenueminuschangeinoutlays.

D)totaltaxrevenueminustotalgovernmentoutlays.

Answer:D

Topic:BudgetSurplusandDeficit

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

34)Abudgetsurplusoccurswhengovernment

A)outlaysexceedstaxrevenues.

B)taxrevenuesexceedsoutlays.

C)taxrevenuesequalsoutlays.

D)taxrevenuesequalsocialsecurityexpenditures.

Answer:B

Topic:BudgetSurplusandDeficit

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

35)Wheneverthefederalgovernmentspendsmorethanitreceivesintaxrevenue,thenby

definitionit

A)runsabudgetsurplus.

B)operatesabalancedbudget.

C)runsabudgetdeficit.

D)increaseseconomicgrowth.

Answer:C

Topic:BudgetSurplusandDeficit

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

36)Thebudgetdeficit

A)isthetotaloutstandingborrowingbythegovernment.

B)isthedifferencebetweengovernmentoutlaysandtaxrevenues.

C)decreasedduringtheObamaAdministration.

D)reacheditspeakintheyear2000.

Answer:B

Topic:BudgetSurplusandDeficit

Skill:Recognition

Questionhistory:Modified10thedition

AACSB:ReflectiveThinking

37)Agovernmentincursabudgetdeficitwhen

A)taxesaregreaterthangovernmentoutlays.

B)taxesarelessthangovernmentoutlays.

C)exportsaregreaterthanimports.

D)exportsarelessthanimports.

Answer:B

Topic:BudgetSurplusandDeficit

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

38)Iftaxesexactlyequaledgovernmentoutlaysthe

A)federalgovernmentdebtwouldbezero.

B)federalgovernmentdebtwoulddecrease.

C)budgetdeficitwouldnotchange.

D)budgetdeficitwouldbezero.

Answer:D

Topic:BudgetSurplusandDeficit

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

39)Ifthefederalgovernment'staxrevenuesaregreaterthanitsoutlays,thenthefederalbudget

hasa

A)deficit.

B)surplus.

C)transferpayment.

D)balancedbudget.

Answer:B

Topic:BudgetSurplusandDeficit

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

40)Bydefinition,agovernmentbudgetdeficitisthesituationthatoccurswhenthe

A)governmentoutlaysexceedwhatitreceivesintaxes.

B)governmentmiscalculatedhowmuchitwillreceiveintaxes.

C)governmentspendsmoneyonthingswhichdonotproducerevenue,suchasschools.

D)economygoesintoarecession.

Answer:A

Topic:BudgetSurplusandDeficit

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

41)TheU.S.government'sbudget

A)mustbebalancedeachyear.

B)hasmostlybeeninsurplusduringthepast30years.

C)hasmostlybeenindeficitduringthepast30years.

D)hasalwaysbeenindeficitduringthepast30years.

Answer:C

Topic:BudgetSurplusandDeficit

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

42)Whentaxrevenuesexceedoutlays,thegovernmenthasa,andwhenoutlays

exceedtaxrevenues,thegovernmenthasa.

A)budgetsurplus;budgetdebt

B)budgetdeficit;budgetsurplus

C)budgetdebt;budgetsurplus

D)budgetsurplus;budgetdeficit

Answer:D

Topic:BudgetSurplusandDeficit

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

43)Agovernmentthatcurrentlyhasabudgetdeficitcanbalanceitsbudgetby.

A)increasingtaxrevenuesbymorethanitincreasesoutlays

B)increasingbothtaxrevenuesandoutlaysbythesameamount

C)decreasingtaxrevenuesbymorethanitdecreasesoutlays

D)decreasingtaxrevenuesbymorethanitincreasesoutlays

Answer:A

Topic:BudgetSurplusandDeficit

Skill:Conceptual

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

44)In2011,theU.S.governmentbudgethadadeficit.Bydefinition,then,

A)taxrevenueswerelessthangovernmentoutlays.

B)taxrevenueswereequaltogovernmentoutlays.

C)taxrevenuesweregreaterthangovernmentoutlays.

D)thegovernmentdebtbecamenegative.

Answer:A

Topic:BudgetSurplusandDeficit

Skill:Conceptual

Questionhistory:Modified10thedition

AACSB:ReflectiveThinking

45)Supposetheonlyrevenuetakeninbythegovernmentisintheformofincometax,andthe

taxrateis10percent.Ifaggregateincomeis$800billion,andgovernmentoutlaysare$100

billionthenthegovernmentbudgethas

A)adeficitof$20billion.

B)asurplusof$20billion.

C)neitherasurplusnoradeficit.

D)adeficitof$8()billion.

Answer:A

Topic:BudgetSurplusandDeficit

Skill:Analytical

Questionhistory:Previousedition,Chapter13

AACSB:AnalyticalSkills

46)In2011,thefederalgovernmentofHappyIslehadtaxrevenuesof$1million,andspent

$500,000ontransferpayments,$250,000ongoodsandservicesand$300,000ondebtinterest.

In2011,thegovernmentofHappyIslehada.

A)balancedbudget

B)budgetdeficitof$50,000

C)budgetsurplusof$50,000

D)budgetdeficitof$1,050,000

Answer:B

Topic:BudgetSurplusandDeficit

Skill:Analytical

Questionhistory:Previousedition,Chapter13

AACSB:AnalyticalSkills

47)Thefederalgovernmentdebtisequaltothe

A)obligationsofbenefitsfromfederaltaxesandexpenditures.

B)sumofallannualfederalgovernmentoutlays.

C)sumofpastbudgetdeficitsminusthesumofpastbudgetsurpluses.

D)annualdifferencebetweenfederalgovernmenttaxrevenuesandoutlays.

Answer:C

Topic:DeficitsandDebt

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

48)Thesumofpastbudgetdeficitsminusthesumofpastbudgetsurplusesrefersto

A)thenationaldebt.

B)thecyclicallyunbalancedbudget.

C)thestructuralnationaldebt.

D)thefederalgovernmentnetworth.

Answer:A

Topic:DeficitsandDebt

Skill:Recognition

Questionhistory:Modified10thedition

AACSB:ReflectiveThinking

49)Ifthegovernmenthasabalancedbudget,thetotalamountofgovernmentdebtis

A)increasing.

B)decreasing.

C)constant.

D)zero.

Answer:C

Topic:DeficitsandDebt

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

50)Ifthegovernmentrunsasurplus,thetotalamountofgovernmentdebtis

A)increasing.

B)decreasing.

C)constant.

D)zero.

Answer:B

Topic:DeficitsandDebt

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

51)Ifthegovernmentrunsadeficit,thetotalamountofgovernmentdebtis

A)increasing.

B)decreasing.

C)constant.

D)zero.

Answer:A

Topic:DeficitsandDebt

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

52)Anincreaseinthegovernmentreducesthegovernment's.

A)budgetdeficit;debt

B)budgetsurplus;debt

C)debt;budgetdeficit

D)Noneoftheaboveanswersiscorrect.

Answer:B

Topic:DeficitsandDebt

Skill:Conceptual

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

53)Supposeacountryhasbeenrunningapersistentgovernmentbudgetdeficit.Ifthedeficitis

reduced,butremainspositive,

A)governmentdebtwillincrease.

B)governmentdebtwilldecrease.

C)thecountrywillexperienceabudgetsurplus.

D)interestpaymentsonthedebtimmediatelywilldecrease.

Answer:A

Topic:DeficitsandDebt

Skill:Conceptual

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

54)Iftaxrevenueequal$1.5billionandgovernmentoutlaysequal$1.6billion,thenthe

A)governmentbudgethasadeficitof$0.1billion.

B)governmentbudgethasasurplusof$0.1billion.

C)governmentdebtisequalto$0.1billion.

D)governmentdebtdeclinesby$0.1billion.

Answer:A

Topic:DeficitsandDebt

Skill:Conceptual

Questionhistory:Previousedition,Chapter13

AACSB:AnalyticalSkills

55)Acountryhasbeeninexistenceforonlytwoyears.Inthefirstyear,taxrevenueswere$1.0

millionandoutlayswere$1.5million.Inthesecondyear,taxrevenueswere$1.5millionand

outlayswere$2.0million.Attheendofthesecondyear,thetotalgovernmentdebtwas

A)$0.5million

B)$lmillion

C)$2.5million

D)$3.5million

Answer:B

Topic:DeficitsandDebt

Skill:Analytical

Questionhistory:Modified10thedition

AACSB:AnalyticalSkills

GovernmentGovernment

taxrevenuesexpenditures

Year

(billionsof(billionsof

dollars)dollars)

1240240

2250245

3260255

4300320

5325340

56)Whatistheamountofthesurplusordeficitincurredinyear1bythegovernmentshownin

theabovetable?

A)$0

B)$25billiondeficit

C)$25billionsurplus

D)$240billionsurplus

Answer:A

Topic:BudgetSurplusorDeficit

Skill:Analytical

Questionhistory:Previousedition,Chapter13

AACSB:AnalyticalSkills

57)Whatistheamountofthesurplusordeficitincurredinyear2bythegovernmentshownin

theabovetable?

A)$0

B)$5billionsurplus

C)$5billiondeficit

D)$250billionsurplus

Answer:B

Topic:BudgetSurplusorDeficit

Skill:Analytical

Questionhistory:Previousedition,Chapter13

AACSB:AnalyticalSkills

58)Whatistheamountofthesurplusordeficitincurredinyear3bythegovernmentshownin

theabovetable?

A)$0

B)$5billionsurplus

C)$5billiondeficit

D)$260billionsurplus

Answer:B

Topic:BudgetSurplusorDeficit

Skill:Analytical

Questionhistory:Previousedition,Chapter13

AACSB:AnalyticalSkills

59)Whatistheamountofthesurplusordeficitincurredinyear4bythegovernmentshownin

theabovetable?

A)$20billiondeficit

B)$35billionsurplus

C)$5billionsurplus

D)$320billionsurplus

Answer:A

Topic:BudgetSurplusorDeficit

Skill:Analytical

Questionhistory:Previousedition,Chapter13

AACSB:AnalyticalSkills

60)Whatistheamountofthesurplusordeficitincurredinyear5bythegovernmentshownin

theabovetable?

A)$15billiondeficit

B)$35billionsurplus

C)$5billionsurplus

D)$325billionsurplus

Answer:A

Topic:BudgetSurplusorDeficit

Skill:Analytical

Questionhistory:Previousedition,Chapter13

AACSB:AnalyticalSkills

61)Thegovernmentbeginsyear1with$25billionofdebt.Basedontheinformationinthe

abovetable,whatistheamountofdebtfollowingyear1?

A)$0

B)$25billion

C)$240billion

D)Notenoughinformationisprovidedtoanswerthequestion.

Answer:B

Topic:DeficitsandDebt

Skill:Analytical

Questionhistory:Previousedition,Chapter13

AACSB:AnalyticalSkills

62)Thegovernmentbeginsyear1with$25billionofdebt.Basedontheinformationinthe

abovetable,whatistheamountofdebtfollowingyear2?

A)$245billion

B)$5billion

C)$250billion

D)$20billion

Answer:D

Topic:DeficitsandDebt

Skill:Analytical

Questionhistory:Previousedition,Chapter13

AACSB:AnalyticalSkills

63)Thegovernmentbeginsyear1with$25billionofdebt.Basedontheinformationinthe

abovetable,whatistheamountofdebtfollowingyear3?

A)$15billion

B)$5billion

C)$20billion

D)$260billion

Answer:A

Topic:DeficitsandDebt

Skill:Analytical

Questionhistory:Previousedition,Chapter13

AACSB:AnalyticalSkills

64)Thegovernmentbeginsyear1with$25billionofdebt.Basedontheinformationinthe

abovetable,whatistheamountofdebtfollowingyear4?

A)-$20billion(Thegovernmenthasnetsavingratherthandebt.)

B)$35billion

C)$5billion

D)$320billion

Answer:B

Topic:DeficitsandDebt

Skill:Analytical

Questionhistory:Previousedition,Chapter13

AACSB:AnalyticalSkills

65)Thegovernmentbeginsyear1with$25billionofdebt.Basedontheinformationinthe

abovetable,whatistheamountofdebtfollowingyear5?

A)-$20billion(Thegovernmenthasnetsavingratherthandebt.)

B)$35billion

C)$50billion

D)$325billion

Answer:C

Topic:DeficitsandDebt

Skill:Analytical

Questionhistory:Previousedition,Chapter13

AACSB:AnalyticalSkills

66)TheU.S.federalbudgetoverthepast30yearshasbeen

A)inbalancemostyears.

B)indeficitmostoftheyears.

C)insurplusmostoftheyears.

D)insurplusabouthalfthetimeanddeficittheotherhalf.

Answer:B

Topic:FederalBudgetHistory

Skill:Recognition

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

67)ComparingtheU.S.budgetpositionfor2010totherestoftheworld,weseethatasa

percentageofGDP,thethaninmostothercountries.

A)U.S.budgetdeficitissmaller

B)U.S.budgetdeficitislarger

C)U.S.budgetsurplusissmaller

D)U.S.budgetsurplusislarger

Answer:B

Topic:FederalBudgetHistory

Skill:Recognition

Questionhistory:Modified10thedition

AACSB:ReflectiveThinking

68)Ifthegovernment'soutlaysare$1.5trillionanditstaxrevenuesare$2.2trillion,the

governmentisrunningabudget

A)surplusof$0.7trillion.

B)surplusof$3.7trillion.

C)deficitof$0.7trillion.

D)deficitof$3.7trillion.

Answer:A

Topic:StudyGuideQuestion,BudgetSurplusandDeficit

Skill:Conceptual

Questionhistory:Previousedition,Chapter13

AACSB:AnalyticalSkills

2Supply-SideEffectsofFiscalPolicy

1)Lookingatthesupply-sideeffectsonaggregatesupplyshowsthatataxhikeonlaborincome

A)weakenstheincentivetowork.

B)decreasespotentialGDP.

C)increasespotentialGDPbecausepeopleworkmoretopaythehighertaxes.

D)BothanswersAandBarecorrect.

Answer:D

Topic:SupplySideEffectsofanIncomeTax

Skill:Conceptual

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

2)Oncesupplysideeffectsaretakenintoaccount,taxcutsforlaborincomecanchange

I.thesupplyoflabor

II.potentialGDP.

A)Ionly

B)IandII

C)IIonly

D)NeitherInorIL

Answer:B

Topic:SupplySideEffectsofanIncomeTax

Skill:Conceptual

Questionhistory:Previousedition,Chapter13

AACSB:ReflectiveThinking

3)Takingaccountofthesupply-sideeffects,ataxcutonlaborincomeemployment

andpotentialGDP.

A)increases;increases

B)increases;decreases

C)decreases;increases

D)decreases;decreases

Answer:A

Topic: