Question 1

Income and revenue from taxes have a specific relationship during recessions. What is it?

Accepted Answer

A)   incomes rise, tax revenue decreases
B)   incomes rise, tax revenue increases
C)   incomes fall, tax revenue increases
D)   incomes fall, tax revenue decreasesE) None of the above
F) B) and C)

Question 2

The government debt is defined as

Accepted Answer

A)   the excess of total expenditures over total revenues.
B)   the excess of total revenues over total expenditures.
C)   government spending on goods and services plus transfer payments.
D)   the sum of all past deficits and surpluses.E) All of the above
F) B) and C)

Question 3

The burdens of the national debt generally fall on

Accepted Answer

A)   past generations.
B)   the present generation.
C)   future generations.
D)   all of the above.E) All of the above
F) B) and C)

Question 4

The U.S. saving rate is

Accepted Answer

A)   higher than that of most major countries.
B)   low.
C)   rapidly increasing.
D)   negative.E) C) and D)
F) B) and C)

Question 5

Recall the Application about why the U.S. federal government took over the debt of the state governments in the late 1700s to answer the following question(s) .
-According to this Application, the federal government's assuming the debts of the state governments that had been incurred during the Revolutionary War was seen as a way to

Accepted Answer

A)   force states to be dependant on the federal government.
B)   strengthen the federal government.
C)   prevent rapid inflation.
D)   balance the federal budget.E) C) and D)
F) B) and D)

Question 6

Using sharp increases or decreases in taxes rather than deficits is a better way to prevent distortions in an economy.

Accepted Answer

A) True 
 B)False

Question 7

Suppose the government's initial debt is $350 billion and that during the next two years the government runs deficits of $90 and $40 billion. If during the third year the government has a $70 billion surplus, the government's additional debt at the end of the three years will be

Accepted Answer

A)   $60 billion.
B)   $200 billion.
C)   $410 billion.
D)   $550 billion.E) None of the above
F) A) and B)

Question 8

An example of a consumption tax is

Accepted Answer

A)   sales tax.
B)   Social Security tax.
C)   an income tax.
D)   transfer payments.E) A) and C)
F) A) and D)

Question 9

When the deficit increases under the concept of Ricardian Equivalence, what happens to savings in the private sector?

Accepted Answer

A)   nothing
B)   savings decrease
C)   savings increase
D)   savers hedge on purchasesE) A) and D)
F) A) and C)

Question 10

Those who favor smaller government tend to do what in order to make it more difficult for politicians to increase government spending? List at least two methods.

Accepted Answer

cut taxes,...

Question 11

The standard way to measure the effect of debt in an economy is the stock of debt relative to the GDP.

Accepted Answer

A) True 
 B)False

Question 12

Transfer payments include

Accepted Answer

A)   Social Security.
B)   dividends.
C)   consumption taxes.
D)   open market sales.E) A) and B)
F) B) and C)

Question 13

What kind of investment instrument is an IRA, and when is the income earned from an IRA taxed?

Accepted Answer

An IRA is a savings account wh...

Question 14

Corporate income is taxed twice.

Accepted Answer

A) True 
 B)False

Question 15

A constitutional balanced budget amendment would

Accepted Answer

A)   require that federal expenditures equal revenues (excluding borrowing) .
B)   divide the federal budget into a capital budget and an operating budget.
C)   require a majority vote of Congress to authorize spending increases.
D)   require that the federal government maintain a balanced operating budget only.E) A) and B)
F) B) and C)

Question 16

To help pull an economy out of a recession and put additional income in the hands of the public, a government can force its expenditures to ________ its revenues and create a ________.

Accepted Answer

A)   reduce; deficit
B)   exceed; deficit
C)   stimulate; depression
D)   exceed; special taxesE) A) and B)
F) None of the above

Question 17

A large government debt can reduce the amount of ________ in an economy and reduce future income and real wages for citizens.

Accepted Answer

A)   employment
B)   capital
C)   government spending
D)   social benefit programsE) B) and D)
F) A) and D)

Question 18

A consumption tax system is likely to benefit

Accepted Answer

A)   higher income individuals.
B)   lower income individuals.
C)   an individual who, regardless of income, is a large consumer.
D)   corporations.E) All of the above
F) B) and D)

Question 19

In the year ________, for the first time in 30 years, the federal government ran a surplus.

Accepted Answer

A)   1980
B)   1985
C)   1990
D)   1998E) A) and C)
F) B) and D)

Question 20

Suppose the government has a $440 billion budget deficit. If the government borrows $330 billion to finance this deficit and finances the rest by printing money, the amount of new money created will be

Accepted Answer

A)   $90 billion.
B)   $110 billion.
C)   $440 billion.
D)   $770 billion.E) A) and D)
F) B) and C)

Exam 17: Macroeconomic Policy Debates

The U.S. saving rate is

Correct Answer
verified

Income and revenue from taxes have a specific relationship during recessions. What is it?

Correct Answer
verified

Suppose the government's initial debt is $350 billion and that during the next two years the government runs deficits of $90 and $40 billion. If during the third year the government has a $70 billion surplus, the government's additional debt at the end of the three years will be

Correct Answer
verified

An example of a consumption tax is

Correct Answer
verified

In the year ________, for the first time in 30 years, the federal government ran a surplus.

Correct Answer
verified

To help pull an economy out of a recession and put additional income in the hands of the public, a government can force its expenditures to its revenues and create a .

Correct Answer
verified

A consumption tax system is likely to benefit

Correct Answer
verified

The government debt is defined as

Correct Answer
verified

Using sharp increases or decreases in taxes rather than deficits is a better way to prevent distortions in an economy.

Correct Answer
verified

Transfer payments include

Correct Answer
verified

Corporate income is taxed twice.

Correct Answer
verified

Suppose the government has a $440 billion budget deficit. If the government borrows $330 billion to finance this deficit and finances the rest by printing money, the amount of new money created will be

Correct Answer
verified

Those who favor smaller government tend to do what in order to make it more difficult for politicians to increase government spending? List at least two methods.

Correct Answer
verified
cut taxes,...
View Answer

What kind of investment instrument is an IRA, and when is the income earned from an IRA taxed?

Correct Answer
verified
An IRA is a savings account wh...
View Answer

Correct Answer
verified

A large government debt can reduce the amount of ________ in an economy and reduce future income and real wages for citizens.

Correct Answer
verified

When the deficit increases under the concept of Ricardian Equivalence, what happens to savings in the private sector?

Correct Answer
verified

A constitutional balanced budget amendment would

Correct Answer
verified

The burdens of the national debt generally fall on

Correct Answer
verified

The standard way to measure the effect of debt in an economy is the stock of debt relative to the GDP.

Correct Answer
verified

Exam 17: Macroeconomic Policy Debates

The U.S. saving rate is

Correct AnswerverifiedShow Answer

Income and revenue from taxes have a specific relationship during recessions. What is it?

Correct AnswerverifiedShow Answer

Suppose the government's initial debt is $350 billion and that during the next two years the government runs deficits of $90 and $40 billion. If during the third year the government has a $70 billion surplus, the government's additional debt at the end of the three years will be

Correct AnswerverifiedShow Answer

An example of a consumption tax is

Correct AnswerverifiedShow Answer

In the year ________, for the first time in 30 years, the federal government ran a surplus.

Correct AnswerverifiedShow Answer

To help pull an economy out of a recession and put additional income in the hands of the public, a government can force its expenditures to ________ its revenues and create a ________.

Correct AnswerverifiedShow Answer

A consumption tax system is likely to benefit

Correct AnswerverifiedShow Answer

The government debt is defined as

Correct AnswerverifiedShow Answer

Using sharp increases or decreases in taxes rather than deficits is a better way to prevent distortions in an economy.

Correct AnswerverifiedShow Answer

Transfer payments include

Correct AnswerverifiedShow Answer

Corporate income is taxed twice.

Correct AnswerverifiedShow Answer

Suppose the government has a $440 billion budget deficit. If the government borrows $330 billion to finance this deficit and finances the rest by printing money, the amount of new money created will be

Correct AnswerverifiedShow Answer

Those who favor smaller government tend to do what in order to make it more difficult for politicians to increase government spending? List at least two methods.

Correct Answerverifiedcut taxes,...View AnswerShow Answer

What kind of investment instrument is an IRA, and when is the income earned from an IRA taxed?

Correct AnswerverifiedAn IRA is a savings account wh...View AnswerShow Answer

Correct AnswerverifiedShow Answer

A large government debt can reduce the amount of ________ in an economy and reduce future income and real wages for citizens.

Correct AnswerverifiedShow Answer

When the deficit increases under the concept of Ricardian Equivalence, what happens to savings in the private sector?

Correct AnswerverifiedShow Answer

A constitutional balanced budget amendment would

Correct AnswerverifiedShow Answer

The burdens of the national debt generally fall on

Correct AnswerverifiedShow Answer

The standard way to measure the effect of debt in an economy is the stock of debt relative to the GDP.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

To help pull an economy out of a recession and put additional income in the hands of the public, a government can force its expenditures to its revenues and create a .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
cut taxes,...
View Answer

Correct Answer
verified
An IRA is a savings account wh...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified