Macomber 202 Final Exam pt 4

1.

1 point

One possible side effect of an increase in government borrowing is...

an increase in interest rates, crowding out private investment

an increase in aggregate supply, causing cyclical unemployment

an increase in taxes, causing people to consume less

an increase in the money supply, causing inflation

2.

1 point

Ricardian Equivalence states that...

a change in government borrowing can be offset by an equal change in the trade balance

a change in government borrowing can be offset by an equal change in private savings

a change in government borrowing can be offset by an equal and opposite change in private investment

a change in government borrowing can be offset by all of the above

3.

1 point

Which of the following budget states is best?

Budget Deficit

Budget Surplus

Balanced Budget

It Depends

4.

1 point

In order to help fix the problem of higher interest rates from expansionary fiscal policy, what could be done?

Expansionary Monetary Policy

Contractionary Fiscal Policy

Contractionary Monetary Policy

Nothing can be done

5.

1 point

An increase in government borrowing will lead to a(n) __ of the exchange rate and a(n) __ in the trade deficit.

depreciation; increase

depreciation; decrease

appreciation; decrease

appreciation; increase

6.

1 point

Many times, politicians may not want to do what is best for the economy as a whole. Which type of policy is going to be the best for getting an economy to potential GDP?

Honesty

Contractionary Fiscal Policy

Countercyclical Policy

Expansionary Fiscal Policy

7.

1 point

The process of getting a bill passed into law will create...

An increase in potential GDP.

More powerful policy than temporary policy.

A downward pressure on interest rates.

Long and variable time lags.

8.

1 point

Expansionary Fiscal Policy has a goal of increasing AD.

True

False

9.

1 point

An increases in government spending and a decrease in taxes have a different effect than one another because

an increase in government spending adds to the deficit, a tax cut does not

not all of a tax cut is spent

this is not true, they have the exact same effect as one another

a tax cut is expansionary, while an increase in government spending is contractionary

10.

1 point

Which of the following is an automatic stabilizer?

Congress cuts marginal tax rates by 3%.

Congress passes a new bill enacting the creation of new infrastructure.

Unemployment benefits increase as aggregate demand falls.

Congress approves slashing the higher education budget by 33%.

11.

1 point

When the government runs a __ it __ government debt.

surplus; adds to

deficit; subtracts from

deficit; adds to

surplus; doesn't change

12.

1 point

A progressive tax takes a higher share from people with a higher level of income.

True

False

13.

1 point

In Zakistan, Private Savings is $6,000, Private Investment is $2,000, and the Trade Surplus is $1,500. What is Government Borrowing?

$1,500

$2,500

Not enough information

$6,500

14.

1 point

In Macomberia, Private Savings is $8000, Trade Deficit is $1000, Private Investment is $7000, and Government Borrowing is $2000. If Government Borrowing becomes $1000, which has happened?

Private savings fell to $7000

Private investment falls to $6000

Trade deficit increases to $2000

Private investment increases to $9000

15.

1 point

Fiscal Policy does not include altering which of the following?

Taxes

Government Borrowing

Money Supply

Government Spending

16.

1 point

Permanent Fiscal Policy is a more powerful changer of people's actions than Temporary Fiscal Policy.

True

False

17.

1 point

When there is a trade surplus, there is a net inflow of financial capital from abroad.

True

False

18.

1 point

If there is a government budget surplus, the government is on the demand side of the financial capital market.

True

False

19.

1 point

If the government wants to borrow more, which of the following could occur to allow it?

A decrease in imports

A decrease in private saving

A decrease in private investment

An increase in exports