Question 1 5 / 5 points
Income taxes create a difference between the interest rate paid by companies and received by lenders. These taxes __________ saving, investment, and the growth rate of real GDP.
Question options:
do not affect
lower
encourage, but may not change
increase
Question 2 5 / 5 points
The U.S. fiscal year runs from __________.
Question options:
July 1 to June 30
August 1 to July 31
September 1 to August 31
October 1 to September 30
Question 3 5 / 5 points
Being a side effect of fiscal policy on the supply side, the provision of public goods and services __________ productivity and potential GDP.
Question options:
does not affect
decreases
increases
can hinder or stimulate
Question 4 5 / 5 points
What type of stabilizing fiscal policy is an increase in the health care budget for citizens without coverage?
Question options:
automatic fiscal policy
discretionary fiscal policy
contractionary fiscal policy
long run fiscal policy
Question 5 5 / 5 points
According to the government expenditure multiplier, when government expenditure increases, aggregate demand increases. Other things remaining the same, what happens to the real GDP?
Question options:
real GDP remains stable
real GDP increases
real GDP decreases
real GDP induces a decrease in consumption expenditure
Question 6 5 / 5 points
A government budget deficit __________ the real interest rate and “crowds out” some private investment, which slows real GDP growth.
Question options:
distorts
decreases
increases
does not affect
Question 7 5 / 5 points
A variable that the Fed can directly control or closely target, and which influences the economy in desirable ways, is known as a(n. __________.
Question options:
fiscal policy instrument
monetary policy instrument
operational instrument
economic instrument
Question 8 5 / 5 points
The percentage deviation of real gross domestic product (GDP. from potential GDP is __________.
Question options:
marginal GDP
input gap
output gap
deadweight loss
Question 9 5 / 5 points
If real GDP is greater than potential GDP with inflation being a problem, the Fed will __________ the federal funds rate using a(n. __________.
Question options:
lower; open market sale
raise; closed market sale
raise; open market sale
lower; closed market sale
Question 10 5 / 5 points
What type of stabilizing fiscal policies arise because tax revenues and outlays fluctuate with the real GDP?
Question options:
automatic fiscal policies
discretionary fiscal policies
contractionary fiscal policies
long run fiscal policies
Question 11 5 / 5 points
Income taxes create a difference between the wage rate paid by companies and received by workers. These taxes __________ both employment and potential GDP.
Question options:
do not affect
lower
encourage, but may not change
increase
Question 12 5 / 5 points
What is the gap created by a tax between what a buyer pays and what a seller receives or between the before-tax and after-tax wage rates?
Question options:
net taxes
tax wedge
induced tax
expenditure tax
Question 13 0 / 5 points
A situation in which financial markets and institutions function normally to allocate capital resources and risk is __________.
Question options:
financial stability
financial instability
fiscal stability
fiscal instability
Question 14 5 / 5 points
A __________ gap leads to inflation and a __________ gap leads to unemployment.
Question options:
negative; positive
positive; negative
negative; near zero
near zero; positive
Question 15 5 / 5 points
If real GDP is below potential GDP, the government might decrease its expenditure on goods and service, decrease transfer payments, raise taxes, or do some combination of all three. This is called a(n. __________.
Question options:
automatic fiscal policy
discretionary fiscal policy
contractionary fiscal policy
fiscal stimulus
Question 16 5 / 5 points
What is the largest source of revenue for the federal government?
Question options:
personal income taxes
social security taxes
corporate income taxes
indirect taxes
Question 17 5 / 5 points
In the long run, an increase in the supply of bank loans is matched by a __________ in the price level and the quantity of real loans is __________.
Question options:
rise; unchanged
rise; increased
fall; unchanged
fall; decrease
Question 18 5 / 5 points
On the outlays side of the budget, how are Social Security benefits, Medicare and Medicaid benefits, unemployment benefits, and other cash benefits to individuals and businesses labeled?
Question options:
expenditure on goods and services
transfer payments
debt interest
indirect taxes
Question 19 5 / 5 points
Who first submits a budget proposal in February?
Question options:
Congress
the House of Representative Budget Committee
the Senate Budget Committee
the President
Question 20 5 / 5 points
If tax revenues equal outlays on the federal budget, what does the government have?
Question options:
a budget surplus
a budget deficit
a balanced budget
the national debt
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