Question : 16.2 Fiscal Stimulus 1) As contrasted to the mainstream view, Keynesian : 1228015

Economics

16.2 Fiscal Stimulus

1) As contrasted to the mainstream view, Keynesian economists believe that ________ than mainstream economists believe.

A) potential GDP is smaller

B) the burden of government debt on future generations is larger

C) the real GDP growth rate is higher

D) fiscal stimulus is weaker

E) the multiplier effect is larger

2) As contrasted to the Keynesian view, mainstream economists believe that ________ than Keynesian economists believe.

A) potential GDP is less important

B) any crowding out effect is smaller

C) the real GDP growth rate is larger

D) the effects from fiscal stimulus are weaker

E) the multiplier effect is larger

3) Mainstream economists believe that Keynesian economists overstate the effect of the multiplier effect. Which of the following statements would mainstream economists NOT consider to be accurate?

A) Effects of a fiscal stimulus are small and short lived.

B) Effects of a fiscal stimulus are incapable of working fast enough to make a difference.

C) A fiscals stimulus does not provide a ‘free lunch’ but does ‘crowd out’ private consumption expenditure and investment.

D) A fiscal stimulus results in bigger government, lower potential GDP, and slower real GDP growth.

E) A fiscal stimulus is a vital tool to fight recession and depression due to the multiplier effect.

4) Automatic stabilizers are defined as

A) actions taken by the President without Congressional consent to stabilize the economy.

B) actions taken by an act of Congress to stabilize the economy.

C) policy that stabilizes without the need for action by the government.

D) discretionary policy taken to stabilize the economy.

E) policy that has no multiplier effects.

5) Automatic changes in tax revenues and expenditures that occur as a result of fluctuations in real GDP are referred to as automatic

A) taxes and expenditure.

B) discretionary taxes and expenditure.

C) government.

D) stabilizers.

E) discretionary policy.

6) Fiscal policies that move the economy toward potential GDP without a change in policy are called

A) routine stabilizers.

B) automatic stabilizers.

C) spending stabilizers.

D) economic stabilizers.

E) GDP stabilizers.

7) An example of automatic fiscal policy is

A) Congress passing a tax rate reduction package.

B) the federal government expanding spending at the Department of Education.

C) expenditure for unemployment benefits increasing as economic growth slows.

D) the Federal Reserve reducing interest rates as economic growth slows.

E) a change in taxes that has no multiplier effect.

8) Which of the following is an example of an automatic fiscal policy action?

A) increased unemployment benefit payments resulting from higher unemployment

B) an increase in spending on defense goods resulting from increased world tensions

C) an increase in the tax rate resulting from a desire to shrink the budget deficit

D) a decrease in the tax rate resulting from an effort to increase aggregate demand to combat a recession

E) None of the above answers are correct.

9) In an expansion, federal tax revenues increase proportionally more than real GDP without the need for any government policy. This increase is an example of

A) discretionary monetary policy.

B) automatic monetary policy.

C) automatic fiscal policy.

D) discretionary fiscal policy.

E) the effect of deficit spending.

10) Taxes that change with the level of real GDP and income are called

A) voluntary taxes.

B) GDP taxes.

C) induced taxes.

D) forced taxes.

E) flexible taxes.

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July 1, 2023

61.When there is a shortage in a market, prices are likely to:

A. Fall because buyers do not wish to buy as much as sellers want to sell.

B. Rise because some buyers will offer to pay a higher price.

C. Fall because sellers are likely to reduce their production if prices rise.

D. Rise because the government will put a price ceiling in place.

62.If a market shortage exists:

A. The invisible hand will work to reduce the price.

B. The only solution is for the government to raise the price.

C. Producers will compete for customers by reducing prices.

D. Consumers will compete for the product by offering to pay more.

63.A market surplus occurs when:

A. People cannot buy the amount of goods and services that they are willing and able to buy.

B. The price is less than the equilibrium price.

C. The quantity supplied exceeds the quantity demanded at a given price.

D. There is a price ceiling.

64.When there is a surplus in a market, prices are likely to fall because:

A. Buyers do not wish to buy as much as sellers want to sell.

B. Some buyers will offer to pay a higher price, initiating a move up the supply curve.

C. Sellers are likely to increase their production.

D. Buyers will wait for the government to establish a price floor.

65.If a market surplus exists:

A. The only resolution is for the government to set the price.

B. Consumers will compete for the product buy offering to pay more.

C. Producers will compete for customers by reducing prices.

D. The equilibrium price is equal to the price ceiling.

66.If demand is constant, a decrease in the supply of gasoline will cause the equilibrium price:

A. To rise and quantity to fall.

B. And quantity both to rise.

C. To fall and quantity to rise.

D. And quantity both to fall.

67.If demand is constant, a leftward shift in the supply curve will result in:

A. A decrease in equilibrium quantity and a lower equilibrium price.

B. An increase in equilibrium quantity and a lower equilibrium price.

C. A decrease in equilibrium quantity and a higher equilibrium price.

D. An increase in equilibrium quantity and a higher equilibrium price.

68.The price of chocolate candy bars rises. This could be due to:

A. A decrease in the wage rate paid to workers in the candy bar factories.

B. A decrease in the cost of chocolate, which is used to produce candy bars.

C. A subsidy by the federal government for the producers of chocolate candy bars.

D. A decrease in the number of chocolate candy bar producers.

69.If demand is unchanged, a rightward shift in the supply curve for plasma TVs will cause:

A. A decrease in equilibrium quantity and a higher equilibrium price.

B. An increase in equilibrium quantity and a higher equilibrium price.

C. An increase in equilibrium quantity and a lower equilibrium price.

D. A decrease in equilibrium quantity and a lower equilibrium price.

70.Which of the following would cause a decrease in the price of automobiles?

A. A technological advance in automobile manufacturing.

B. An increase in the wages paid to automobile assembly line workers.

C. A decrease in the cost of gasoline.

D. An increase in the number of buyers.