Question : 11) A tax rebate, like the one issued in 2008, : 1244883

11) A tax rebate, like the one issued in 2008, is likely to ________ consumption spending ________ than would a permanent tax cut.

A) increase; more

B) increase; less

C) decrease; more

D) decrease; less

12) When President Obama took office in January 2009, he pledged to pursue an expansionary fiscal policy to try to pull the economy out of the recession. The next month, Congress passed the American Recovery and Reinvestment Act of 2009, an $840 billion package of spending increases and tax cuts that was

A) the largest fiscal policy action in U.S. history.

B) second in size only to the fiscal policy action taken during the Great Depression.

C) small in comparison to the actions taken during the recession of 1974-1975

D) roughly equal to the spending increases and tax cuts implemented during the recession of 1980-1982.

13) Of the $840 billion American Recovery and Reinvestment Act stimulus package which was enacted in 2009, approximately ________ took the form of tax cuts and ________ took the form of increases in government expenditures.

A) one-half; one-half

B) three-fourths; one-fourth

C) one-tenth; nine-tenths

D) one-third; two-thirds

14) Of the $840 billion American Recovery and Reinvestment Act stimulus package which was enacted in 2009, the largest spending increase occurred in which category?

A) energy and the environment

B) military, veterans, and homeland security

C) health care, social services, and education

D) transportation and housing

15) In preparing their estimates of the stimulus package’s effect on GDP, Obama administration economists estimated a government purchases multiplier of 1.57. Economist Robert Barro argues that during wartime, the government purchases multiplier would be ________ the administration’s estimate, and economists Lawrence Christiano, Martin Eichenbaum, and Sergio Rebelo argued that when short-term interest rates are near zero, the multiplier would be ________ the administration’s estimate.

A) higher than; lower than

B) lower than; higher than

C) higher than; equal to

D) equal to; lower than

16) In preparing their estimates of the stimulus package’s effect on GDP, Obama administration economists estimated a government purchases multiplier of 1.57. This indicates that a $1 billion increase in government purchases would increase equilibrium real GDP by

A) $1 billion.

B) $1.57 billion.

C) $15.7 billion.

D) $157 billion.

17) Poorly timed discretionary policy can do more harm than good. Getting the timing right with fiscal policy is generally

A) less difficult than with monetary policy.

B) far less difficult than with monetary policy.

C) more difficult than with monetary policy.

D) about the same difficulty as with monetary policy.

18) It is ________ difficult to effectively time fiscal policy than monetary policy because ________.

A) more; fiscal policy can be quickly decided and changed

B) more; fiscal policy takes longer to implement

C) less; monetary policy takes longer to decide and change

D) less; monetary policy takes longer to implement

19) A(n) ________ in private expenditures as a result of a(n) ________ in government purchases is called crowding out.

A) increase; decrease

B) decrease; decrease

C) decrease; increase

D) increase; increase

20) if government spending and the price level increase, then

A) the interest rate increases, consumption declines, and investment spending declines.

B) the interest rate decreases, consumption declines, and investment spending declines.

C) the interest rate increases, consumption increases, and investment spending increases.

D) the interest rate decreases, consumption increases, and investment spending increases.