Question : 11) If the tax multiplier -1.5 and a $200 billion : 1266986

Economics

11) If the tax multiplier is -1.5 and a $200 billion tax increase is implemented, what is the change in GDP, holding everything else constant? (Assume the price level stays constant.)

A) a $300 billion decrease in GDP

B) a $300 billion increase in GDP

C) a $30 billion increase in GDP

D) a $133.33 billion decrease in GDP

E) a $133.33 billion increase in GDP

12) Suppose the government spending multiplier is 2. The federal government cuts spending by $40 billion. What is the change in GDP if the price level is not held constant?

A) an increase of less than $80 billion

B) an increase equal to $80 billion

C) an increase of greater than $80 billion

D) a decrease of less than $80 billion

E) a decrease of more than $80 billion

13) The tax multiplier is smaller in absolute value than the government purchases multiplier because some portion of the

A) decrease in taxes will be saved by households and not spent, and some portion will be spent on imported goods.

B) decrease in taxes will be saved by households and not spent, and some portion will be spent on consumer durable goods.

C) increase in government purchases will be saved by households and not spent, and some portion will be spent on imported goods.

D) increase in government purchases will be saved by households and not spent, and some portion will be spent on consumer durable goods.

14) A decrease in the tax rate will ________ the disposable income of households and ________ the size of the multiplier effect.

A) increase; increase

B) decrease; increase

C) increase; decrease

D) decrease; decrease

E) increase; not change

15) Suppose Congress increased spending by $100 billion and raised taxes by $100 billion to keep the budget balanced. What will happen to real equilibrium GDP?

A) Real equilibrium GDP will fall.

B) Real equilibrium GDP will rise.

C) There will be no change in real equilibrium GDP.

D) Real equilibrium GDP will initially rise, but then fall below its previous equilibrium value.

16) Suppose real GDP is $12.6 trillion and potential GDP is $12.4 trillion. To move the economy back to potential GDP, Congress should

A) lower government purchases by an amount less than $200 billion.

B) lower government purchases by $200 billion.

C) raise taxes by $200 billion.

D) lower taxes by $200 billion.

E) raise taxes by an amount more than $200 billion.

17) Suppose real GDP is $12.1 trillion and potential GDP is $12.6 trillion. To move the economy back to potential GDP, Congress should

A) lower taxes by an amount less than $500 billion.

B) raise government purchases by $500 billion.

C) raise government purchases by more than $500 billion.

D) lower taxes by $500 billion.

E) lower government purchases by $500 billion.

18) The multiplier effect following an increase in expenditure is generated by induced increases in consumption expenditure as income rises.

19) In absolute value, the tax multiplier is greater than the government purchases multiplier.

20) If government increases taxes by the same amount it increases government spending, there will be no effect on aggregate demand: the increase in government spending is offset by an equal decrease in consumption spending by households.

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July 1, 2023

11) Net income appears on the worksheet:

A) only in the balance sheet credit column.

B) only in the income statement credit column

C) in the income statement debit column and balance sheet debit column

D) in the income statement debit column and balance sheet credit column

12) Net loss appears on the worksheet:

A) in the income statement credit column and balance sheet debit column.

B) only in the income statement credit column.

C) in the income statement debit column and balance sheet credit column.

D) only in the balance sheet debit column.

13) The prepaid rent account has a balance that is $400 less in the worksheet's balance sheet debit column than in the worksheet's trial balance debit column. This would be the result of a:

A) $400 entry to prepaid rent in the worksheet's adjustments debit column.

B) $400 entry to prepaid rent in the worksheet's adjustments credit column.

C) $400 entry to rent expense in the worksheet's adjustments credit column.

D) mistake in cross-adding the worksheet.

14) Salary expense has a balance of $65,400 in the trial balance debit column of a worksheet. The adjustments credit column contains a $500 credit to salary payable. The adjusted trial balance column will show:

A) salary expense with a debit balance of $64,900.

B) salary expense with a debit balance of $6,500.

C) salary expense with a debit balance of $65,900.

D) salary payable with a credit balance of $65,900.

15) Interest expense on a worksheet's trial balance debit column has a $3,400 balance and a $4,000 balance on the worksheet's income statement debit column. The difference is due to:

A) an entry in the adjustments credit column for $600 to interest expense.

B) an entry in the adjustments debit column for $4,000 to interest expense.

C) an entry in the adjustments credit column for $4,000 to interest expense.

D) an entry in the adjustments credit column for $600 to interest payable.

16) On a worksheet, the income statement debit column equals $190,800 and the income statement credit column equals $195,600. From this data, it can be determined that:

A) the company had a net loss of $4,800 added to the income statement credit column.

B) the company had a net income of $4,800 added to the income statement debit column.

C) the company had a net loss of $4,800 added to the income statement debit column.

D) the company had a net income of $4,800 added to the income statement credit column.

17) Which of the following appears in the balance sheet debit column of a worksheet?

A) service revenue

B) income summary

C) owner withdrawals

D) accounts payable

18) Which of the following appears in the income statement credit column of a worksheet?

A) service revenue

B) income summary

C) owner withdrawals

D) accounts receivable

19) If the unearned service revenue account had an unadjusted normal balance of $4,800, and an adjustment was made debiting the account for $1,500, the account would appear on the adjusted trial balance of the worksheet as a:

A) $4,800 debit.

B) $6,300 credit.

C) $3,300 credit.

D) $3,300 debit.

20) After all the account balances have been extended to the balance sheet columns of the worksheet, the totals of the debit and credit columns are $35,350 and $38,750, respectively. It can be concluded the company has a:

A) net income of $3,400.

B) net loss of $3,400.

C) $74,100 net loss.

D) $74,100 net income.