mac13L1

  • 1

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    Prior to the Great Depression, the purpose of the federal budget was to ____________.

    maintain low interest rates
    finance the activities of the government
    decrease unemployment
    stabilize the economy

  • 2

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    Fiscal policy attempts to achieve all of the following objectives except _________.

    full employment
    a stable money supply
    economic growth
    price level stability

  • 3

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    The Council of Economic Advisors have the following roles except ________________.

    monitoring the U.S. economy
    making forecasts of where the economy is heading
    keeping the President informed about the economy
    proposing the federal government's budget to Congress

  • 4

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    When tax revenues exceed expenditures, the government has a _______, and when expenditures exceed tax revenues, the government has a _______.

    budget surplus; budget debt
    budget debt; budget surplus
    budget deficit; budget surplus
    budget surplus; budget deficit

  • 5

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    The government debt is equal to the _______minus _______.

    current deficit; the current surplus
    sum of past deficits; the sum of past surpluses
    sum of past deficits; the current surplus
    current surplus; the sum of past deficits

  • 6

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    A fall in income that results in a decrease in tax revenues is an example of ________________.

    a recession
    automatic fiscal policy
    discretionary fiscal policy
    lump-sum taxes

  • 7

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    An increase in the income tax rate is an example of ___________.

    increasing the government debt
    discretionary fiscal policy
    lump-sum taxes
    increasing the government deficit

  • 8

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    _______ taxes vary with _______, but _______ taxes do not vary with _______.

    Lump-sum; GDP; induced; GDP
    Induced; real GDP; lump-sum; real GDP
    Lump-sum; real GDP; lump-sum; real GDP
    Induced; real GDP; income; real GDP

  • 9

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    The amount by which a change in government purchases of goods and services is multiplied to determine the change in equilibrium expenditure that it generates is the ___________________.

    increase in real GDP
    government purchases multiplier
    goods and services multiplier
    slope of the AE curve

  • 10

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    The lump-sum tax multiplier is ______________.

    between 0 and 1
    negative
    positive
    equal to the induced tax multiplier

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