Econ Quiz Unit 8 Part 2

The government has a budget deficit if:
Question 1Select one:

a.
its total revenues are equal to its total expenditures.
b.
its total revenues are less than its total expenditures. ●
c.
its total revenues are greater than its total expenditures.
d.
the money supply is less than total expenditures.
Question 2
Incorrect
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Suppose a country's debt rises by 6% and its GDP rises by 8%. What happens to the debt-GDP
ratio?
a.
It rises if there is a budget deficit that period.
b.
It falls. ●
c.
It rises.
d.
There is insufficient information to answer the question.
Question 3
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A transfer payment that rises automatically during a recession is:
a.
interest payments on the national debt.
b.
unemployment compensation. ●
c.
Social Security payments to retired persons.
d.
government payments to war veterans.
Question 4
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Discretionary fiscal policy refers to:
a. ●
deliberate government efforts to stabilize the economy through government spending and taxes.
b.
the use of automatic stabilizers and intervention policies to stabilize the economy.
c.
any government policy that requires a lag period of at least three months.
d.
the deliberate use of government spending and taxes to complement the effects of monetary
policy in an effort to stabilize the economy.
Question 5
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Suppose the economy experiences an inflationary gap. Policymakers who believe that
government is too big would favor which of the following policies to close the gap?
a.
reduction in government spending ●
b.
increases in income tax rates
c.
increases in corporate tax rates
d.
increases in interest rates
Question 6
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A recessionary gap can be closed with:
a.
using a contractionary monetary policy.
b.
an increase in taxes.
c.
a decrease in government purchases.
d.
using an expansionary fiscal policy. ●
Question 7
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If there is an inflationary gap in the economy, discretionary fiscal policy would likely involve an
action to:
a.
shift the aggregate demand curve to the right.
b.
shift the aggregate demand curve to the left. ●
c.
shift both the aggregate demand curve and aggregate supply curve to the right.
d.
shift both the aggregate demand curve and aggregate supply curve to the left.
Question 8
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Which of the following statements is true?
a.
Unlike monetary policy, fiscal policy is not subject to lags.
b.
Like monetary policy, fiscal policy is also subject to the same types of lags.
c.
In general, fiscal policy lags are much shorter than monetary policy lags.
d.
Although both monetary and fiscal policies are subject to lags, fiscal policy lags are easier to eliminate.
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The correct answer is: Like monetary policy, fiscal policy is also subject to the same types of lags.
Question 9
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An expansionary fiscal policy is likely to result in the Treasury _______ bonds, the prices of bonds
_______, and interest rates _______.
a.
selling more; falling; falling
b.
buying more; rising; falling
c.
selling more; rising; rising
d.
selling more; falling; rising
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The correct answer is: selling more; falling; rising
Question 10
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In a study on the degree of crowding out of Canadian private investment as a result of government
expenditures from 1961-2000, Professor Baotai Wang concluded that:
a.
all types of government spending
b.
government expenditures that increased human capital, such as spending on health and education, are
more likely to lead to crowding out than other types of government expenditures.
c.
crowding out depends on the nature of spending done by the government.
d.
government expenditures, on infrastructure and capital are more likely to lead to crowding in because
they expand a nation’s capital stock.
Feedback
The correct answer is: crowding out depends on the nature of spending done by the government.

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The government has a budget deficit if:

Question 1Select one:

Mark 0.00 out of 1.00

Mark 1.00 out of 1.00

Mark 1.00 out of 1.00

Mark 1.00 out of 1.00

Question 8Select one:

Unlike monetary policy, fiscal policy is not subject to lags.

Mark 1.00 out of 1.00

Question 9Select one:

selling more; falling; falling

selling more; rising; rising

selling more; falling; rising

The correct answer is: selling more; falling; rising

Mark 1.00 out of 1.00

Question 10Select one:

all types of government spending

crowding out depends on the nature of spending done by the government.

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