Chapter 13 – Fiscal Policy, Deficits, and Debt
94. Refer to the above diagram. Assume that G and T1 are the relevant curves, the economy is
currently at A, and the full-employment GDP is B. This economy has a(n):
95. Refer to the above diagram. Assume that G and T1 are the relevant curves, the economy is
currently at A, and the full–employment GDP is B. This economy has a(n):
96. Refer to the above diagram. Assume that G and T2 are the relevant curves, the economy is
currently at A, and the full-employment GDP is B. This economy has a(n):
Chapter 13 – Fiscal Policy, Deficits, and Debt
97. Refer to the above diagram. Assume that G and T1 are the relevant curves, the economy is
currently at B, and the full-employment GDP is A. This economy has a(n):
98. Refer to the above diagram. Discretionary fiscal policy designed to slow the economy is
illustrated by:
99. Refer to the above diagram. Discretionary fiscal policy designed to expand GDP is
illustrated by:
Chapter 13 – Fiscal Policy, Deficits, and Debt
100. If the full-employment GDP for the above economy is at L, then we can say with
certainty that the:
101. With the expenditures programs and the tax system shown in the above diagram:
Chapter 13 – Fiscal Policy, Deficits, and Debt
102. Refer to the above diagram. The degree of built-in stability in the above economy could
be increased by:
103. An effective expansionary fiscal policy will:
Chapter 13 – Fiscal Policy, Deficits, and Debt
104. Refer to the above diagram where T is tax revenues and G is government expenditures.
All figures are in billions of dollars. If the full-employment GDP is $400 billion while the
actual GDP is $200 billion, the actual budget deficit is:
Chapter 13 – Fiscal Policy, Deficits, and Debt
105. Refer to the above diagram where T is tax revenues and G is government expenditures.
All figures are in billions of dollars. If the full-employment GDP is $400 billion while the
actual GDP is $200 billion, the cyclically-adjusted budget deficit is:
106. Refer to the above diagram where T is tax revenues and G is government expenditures.
All figures are in billions of dollars. If the full-employment GDP is $400 billion while the
actual GDP is $300 billion, the cyclical deficit is:
Chapter 13 – Fiscal Policy, Deficits, and Debt
107. Refer to the above diagram where T is tax revenues and G is government expenditures.
All figures are in billions of dollars. If the full-employment GDP is $400 billion while the
actual GDP is $200 billion, the:
108. Refer to the above diagram where T is tax revenues and G is government expenditures.
All figures are in billions of dollars. If the full-employment GDP and actual GDP are each
$400 billion, this economy will realize a:
Chapter 13 – Fiscal Policy, Deficits, and Debt
109. Refer to the above diagram where T is tax revenues and G is government expenditures.
All figures are in billions of dollars. If the full-employment and actual GDP are each $400
billion, government can balance its cyclically-adjusted budget by:
110. Economists refer to a budget deficit that exists when the economy is achieving full
employment as a:
Chapter 13 – Fiscal Policy, Deficits, and Debt
111. When the economy is at full employment:
112. If government increases the size of its cyclically-adjusted surplus, we can:
113. The Federal budget deficit is found by:
Chapter 13 – Fiscal Policy, Deficits, and Debt
114. The amount by which government expenditures exceed revenues during a particular year
is the:
115. The amount by which Federal tax revenues exceed Federal government expenditures
during a particular year is the:
116. Since 2002, the United States has had:
Chapter 13 – Fiscal Policy, Deficits, and Debt
117. Which of the following is a true statement?
118. The immediate primary cause of the swing from Federal budget surpluses in 2000 and
2001 to a budget deficit in 2002 was:
119. Which of the following did not contribute directly to the Great Recession?
Chapter 13 – Fiscal Policy, Deficits, and Debt
120. The American Recovery and Reinvestment Act of 2009:
121. The cyclically-adjusted budget deficit for the United States:
122. The American Recovery and Reinvestment Act of 2009 was implemented primarily to:
Chapter 13 – Fiscal Policy, Deficits, and Debt
123. Increases in the Federal budget deficit from 2007 to 2009 were caused:
Answer the question on the basis of the following sequence of events involving fiscal policy:
(1) The composite index of leading indicators turns downward for three consecutive months,
suggesting the possibility of a recession; (2) Economists reach agreement that the economy is
moving into a recession; (3) A tax cut is proposed in Congress; (4) The tax cut is passed by
Congress and signed by the President; (5) Consumption spending begins to rise, aggregate
demand increases, and the economy begins to recover.
124. Refer to the above information. The operational lag of fiscal policy is reflected in
event(s):
Chapter 13 – Fiscal Policy, Deficits, and Debt
125. Refer to the above information. The recognition lag of fiscal policy is reflected in
events:
126. Refer to the above information. The administrative lag of fiscal policy is reflected in
events:
127. Which of the following best describes the idea of a political business cycle?
Chapter 13 – Fiscal Policy, Deficits, and Debt
128. The political business cycle refers to the possibility that:
129. The crowding-out effect of expansionary fiscal policy suggests that:
130. The crowding-out effect of expansionary fiscal policy suggests that:
Chapter 13 – Fiscal Policy, Deficits, and Debt
131. The financing of a government deficit increases interest rates and, as a result, reduces
investment spending. This statement describes:
132. The crowding-out effect is:
133. Which of the following fiscal policy actions is most likely to increase aggregate supply?
Chapter 13 – Fiscal Policy, Deficits, and Debt
134. Refer to the above diagrams. Suppose that government undertakes fiscal policy designed
to increase aggregate demand from AD1 to AD2 and thereby to increase GDP from X to Z. In
terms of graph B, which of the following might explain why GDP increases to Y rather than to
Z?
Chapter 13 – Fiscal Policy, Deficits, and Debt
135. Refer to the above diagrams. Suppose that government undertakes fiscal policy designed
to increase aggregate demand from AD1 to AD2 and thereby to increase GDP from X to Z. In
terms of graph B, which of the following might explain why GDP increases to Y rather than to
Z?
136. The U.S. public debt:
137. The public debt is the amount of money that:
Chapter 13 – Fiscal Policy, Deficits, and Debt
138. The public debt is held as:
139. The public debt for the above economy is: