MULTIPLE CHOICE QUESTIONS1. Which of the following is a category of fiscal policy?A) government policies regarding transfer payments and welfare benefitsB) government policies regarding the purchase of goods and servicesC) government policies regarding taxationD) all of the above2. Which of the following is CORRECT regarding tax revenues?A) they do not change with changes in the tax rateB) they increase during recessionsC) they are the only revenue source in the government's budgetD) they decrease during economic slowdowns3. Disposable incomeA) decreases when income decreases.B) decreases when net taxes decrease.C) increases when saving decreases.D) all of the above4. Planned aggregate expenditure increases when ________ in the income-expenditure model.A) the government sector is excludedB) consumption is excludedC) the government sector is includedD) investment is excluded5. If output is greater than planned aggregate expenditure, there will beA) no change in inventories.B) a planned increase in inventories.C) an unplanned decrease in inventories.D) an unplanned increase in inventories.6. The aggregate consumption function is C = 200 + 0.9Yd. If income is $1,500 and net taxes are $300,consumption equalsA) 1,280.B) 1,820.C) 2,000.D) 2,180. 7. Refer to table above. At an output level of $1,500 billion, the level of aggregate expenditure is ________ billion.A) $1,300B) $1,400C) $1,500D) $1,6008. Refer to table above. At an output level of $1,500 billion, there is an unplanned inventoryA) increase of $200 billion.B) change of $0.C) increase of $100 billion.D) decrease of $200 billion.9. Refer to table above. The equilibrium level of output is ________ billion.A) $1,000B) $1,500C) $2,000D) $2,50010.Refer to table above. At the equilibrium level of income, leakages equal ________ billion.A) $0B) $100C) $200D) $40011. The Norwegian economy can be characterized byC = 100 + 0.8YdG = 500T = 200I = 200According to this information, the equilibrium level of output for the Norwegian economy isA) 2,850.B) 3,200.C) 4,000.D) 4,800.12. During a recession, unemployment ________, tax revenue ________, and the budget deficit ________.A) rises; rises; fallsB) falls; falls; risesC) rises; falls; risesD) falls; rises; rises13. The presence of ________ means that the federal deficit is larger than it otherwise would be in a recession, andsmaller than it otherwise would be in an expansion.A) the tax multiplierB) net exportsC) automatic stabilizersD) unplanned inventory changes14. During an expansion, automatic stabilizers cause the federal deficit toA) remain unchanged.B) decrease.C) increase.D) either increase or decrease. 15.If the economy's full-employment output is $12 trillion, actual output is $10 trillion, and the budget deficit is $2trillion, the deficit in this case is known as aA) structural deficit.B) cyclical deficit.C) debt deficit.D) natural employment deficit.16.If the economy's full-employment output is $12 trillion, actual output is $12 trillion, and the budget deficit is $40billion, the deficit in this case is known as aA) cyclical deficit.B) natural employment deficit.C) fiscal deficit.D) structural deficit.17. A barter transaction involves exchangingA) one good for money.B) one good for another good.C) money for a service.D) a service for a promise of a future monetary payment.18. The property that makes money a good medium of exchange and a good store of value is theA) transactions demand for money.B) unlimited supply of money.C) liquidity property of money.D) asset demand for money.19.Because money eliminates the "double coincidence of wants" problem, the development of money as a________ has facilitated the expansion of trade.A) medium of exchangeB) unit of accountC) store of valueD) measure of value
MULTIPLE CHOICE QUESTIONS
1. Which of the following is a category of fiscal policy?
A) government policies regarding transfer payments and welfare benefits
B) government policies regarding the purchase of goods and services
C) government policies regarding taxation
D) all of the above
2. Which of the following is CORRECT regarding tax revenues?
A) they do not change with changes in the tax rate
B) they increase during recessions
C) they are the only revenue source in the government's budget
D) they decrease during economic slowdowns
3. Disposable income
A) decreases when income decreases.
B) decreases when net taxes decrease.
C) increases when saving decreases.
D) all of the above
4. Planned aggregate expenditure increases when ________ in the income-expenditure model.
A) the government sector is excluded
B) consumption is excluded
C) the government sector is included
D) investment is excluded
5. If output is greater than planned aggregate expenditure, there will be
A) no change in inventories.
B) a planned increase in inventories.
C) an unplanned decrease in inventories.
D) an unplanned increase in inventories.
6. The aggregate consumption function is C = 200 + 0.9Yd. If income is $1,500 and net taxes are $300,
consumption equals
A) 1,280.
B) 1,820.
C) 2,000.
D) 2,180.
7. Refer to table above. At an output level of $1,500 billion, the level of aggregate expenditure is ________ billion.
A) $1,300
B) $1,400
C) $1,500
D) $1,600
8. Refer to table above. At an output level of $1,500 billion, there is an unplanned inventory
A) increase of $200 billion.
B) change of $0.
C) increase of $100 billion.
D) decrease of $200 billion.
9. Refer to table above. The equilibrium level of output is ________ billion.
A) $1,000
B) $1,500
C) $2,000
D) $2,500
10.Refer to table above. At the equilibrium level of income, leakages equal ________ billion.
A) $0
B) $100
C) $200
D) $400
11. The Norwegian economy can be characterized by
C = 100 + 0.8Yd
G = 500
T = 200
I = 200
According to this information, the equilibrium level of output for the Norwegian economy is
A) 2,850.
B) 3,200.
C) 4,000.
D) 4,800.
12. During a recession,
A) rises; rises; falls
B) falls; falls; rises
C) rises; falls; rises
D) falls; rises; rises
13. The presence of ________ means that the federal deficit is larger than it otherwise would be in a recession, and
smaller than it otherwise would be in an expansion.
A) the tax multiplier
B) net exports
C) automatic stabilizers
D) unplanned inventory changes
14. During an expansion, automatic stabilizers cause the federal deficit to
A) remain unchanged.
B) decrease.
C) increase.
D) either increase or decrease.
15.If the economy's full-employment output is $12 trillion, actual output is $10 trillion, and the budget deficit is $2
trillion, the deficit in this case is known as a
A) structural deficit.
B) cyclical deficit.
C) debt deficit.
D) natural employment deficit.
16.If the economy's full-employment output is $12 trillion, actual output is $12 trillion, and the budget deficit is $40
billion, the deficit in this case is known as a
A) cyclical deficit.
B) natural employment deficit.
C) fiscal deficit.
D) structural deficit.
17. A barter transaction involves exchanging
A) one good for money.
B) one good for another good.
C) money for a service.
D) a service for a promise of a future monetary payment.
18. The property that makes money a good medium of exchange and a good store of value is the
A) transactions demand for money.
B) unlimited supply of money.
C) liquidity property of money.
D) asset demand for money.
19.Because money eliminates the "double coincidence of wants" problem, the development of money as a
________ has facilitated the expansion of trade.
A) medium of exchange
B) unit of account
C) store of value
D) measure of value
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