Test Bank Solution Manual for Macroeconomics Chapter 13 Already Passed
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Macroeconomics
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Macroeconomics
Test Bank Solution Manual for Macroeconomics Chapter 13 Already Passed
The total amount of debt owed by the Federal government is represented by the total value of the outstanding: - Answers U.S. government securities
Most of the U.S. public debt is owed to the nation's citizens and domestic ins...
Test Bank Solution Manual for Macroeconomics Chapter 13 Already Passed
The total amount of debt owed by the Federal government is represented by the total value of the
outstanding: - Answers U.S. government securities
Most of the U.S. public debt is owed to the nation's citizens and domestic institutions. This is one reason
that the public debt: - Answers Does not impose a large burden on future generations
Refer to the graph above. Assume that the economy is in a recession with a price level of P1 and output
level Q1. The government then adopts an appropriate discretionary fiscal policy. What will be the most
likely new equilibrium price level and output? - Answers P2 and Q2
If taxation becomes more progressive the built-in stability in the economy will decrease. - Answers False
A given reduction in government spending will dampen demand-pull inflation by a greater amount when
the: - Answers Economy's aggregate supply curve is steep
When the Federal government takes budgetary action to stimulate the economy or rein in inflation such
policy is: - Answers Discretionary Fiscal Policy
The following is budget information for a hypothetical economy. All data are in billions of dollars. Refer
to the above table. The budget deficit was $75 billion in: - Answers Year 5
One timing problem in using fiscal policy to counter a recession is the "recognition lag" that occurs
between the: - Answers Start of the recession and the time it takes to recognize that the recession has
started.
Which of the following nations had the highest public sector debt as a percentage of GDP in 2012? -
Answers Japan
Of the U.S. Federal debt held by foreigners in 2012 China held roughly: - Answers 22%
You are given the following information about aggregate demand at the existing price level for an
economy: (1) consumption = $400 billion; (2) investment = $40 billion; (3) government purchases = $90
billion; and (4) net export = $25 billion. If the full-employment level of GDP for this economy is $600
billion then what combination of actions would be most consistent with closing the GDP-gap here? -
Answers Decrease government spending and taxes?
Expansionary fiscal policy will tend to reduce the budget deficit. - Answers False
The following is budget information for a hypothetical economy. All data are in billions of dollars. Refer
to the above table. In which year is there a balanced budget? - Answers Year 2
The so-called crowding-out effect refers to government spending crowding out private investment
spending. - Answers True
The goal of expansionary fiscal policy is to rein in inflation. - Answers False
, Which of the following is an example of built-in stability? As real GDP decreases income tax revenues: -
Answers Decrease and transfer payments increase
If there is a constitutional requirement to maintain a balanced budget then during a recession when tax
revenues are shrinking the government will have to implement: - Answers Contractionary fiscal policy
Which of the following fiscal policy changes would be the most contractionary? - Answers A $10 billion
increase in taxes and a $30 billion cut in government spending
The more progressive the tax system the: - Answers Greater is the built-in stability for the economy
Transfer payments that increase as GDP falls are a type of automatic stabilizer in the economy. -
Answers True
If a government wants to pursue an expansionary fiscal policy then a tax cut of a certain size will be
more expansionary when the: - Answers Economy's MPS is small
Refer to the figure above. The economy is at equilibrium at point B. What would expansionary fiscal
policy do? - Answers Move the economy from point B towards point A
If Congress passes legislation to increase government spending to counter the effects of a recession then
this would be an example of a(n): - Answers Expansionary fiscal policy
It is possible for an increase in government spending to encourage instead of crowding out private
investment. - Answers True
Which of the following fiscal policy changes would be the most expansionary? - Answers A $40 billion
increase in government spending?
If the U.S. Congress passes legislation to raise taxes to control demand-pull inflation then this would be
an example of a(n): - Answers Contractionary fiscal policy
A major reason that the public debt cannot bankrupt the Federal government is because: - Answers The
public debt can be easily refinanced by issuing new bonds
Which of the following expansionary fiscal policy changes would be most favored by those economists
who think that the government is too large and inefficient? - Answers A $40 billion tax cut
To track the public debt over time and understand its significance to the economy it is best: - Answers
Measured relative to the gross domestic product
Proponents of the notion of a "political business cycle" suggest that: - Answers A possible cause of
economic fluctuations is the use of fiscal policy by policy-makers for political purposes and goals
In the graph above - Answers tax revenues vary:, Directly with the level of GDP
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