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Fiscal Policy 32 CLICKER QUESTIONS

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© 2013 Pearson CHECKPOINT 32.1 A.has a budget with a positive balance B.has a budget deficit C.has a budget surplus D.has a budget with a negative debt E.must cut its expenditure because outlays cannot exceed tax revenues Question 1 When government outlays exceed tax revenues, the government ______.

© 2013 Pearson CHECKPOINT 32.1 A.budget deficit B.balanced budget C.budget supplement D.budget surplus E.zero budget balance Question 2 National debt decreases in a given year when the government of the country has a ______.

© 2013 Pearson CHECKPOINT 32.1 A.Congress; Congress B.the House of Representatives; the president C.the Senate; the Treasury Secretary D.the president; Congress E.the Treasury Secretary; Congress Question 3 In the United States, _______ proposes the budget, and _____ signs the budget act into law.

© 2013 Pearson CHECKPOINT 32.2 A.mainstream; useful B.mainstream; weak C.Keynesian; useful D.Keynesian; useless E.None of the above answers is correct. Question 4 The ____ view says that fiscal stimulus has a multiplier effect that makes it a ____ tool to fight a deep recession.

© 2013 Pearson CHECKPOINT 32.2 A.the automatic increase in needs-tested spending in a recession B.induced taxes C.a decrease government expenditure on goods and services D.a decrease in needs-tested spending E.a cut in taxes Question 5 An example of fiscal stimulus policy is ______.

© 2013 Pearson CHECKPOINT 32.2 A.an inflationary; increases aggregate demand B.an inflationary; decreases aggregate demand C.a recessionary; increases aggregate supply D.a recessionary; decreases aggregate supply E.a recessionary; decreases aggregate demand Question 6 If the economy is at an above full-employment equilibrium, ____ gap exists, and discretionary fiscal policy that ____ will return real GDP to potential GDP.

© 2013 Pearson CHECKPOINT 32.2 A.induced taxes and automatic stabilizers B.law-making time lags, estimation of potential GDP, and economic forecasting C.economic forecasting, law-making time lags, and induced taxes D.automatic stabilizers, law-making time lags, and potential GDP estimation E.automatic stabilizers and induced taxes Question 7 Discretionary fiscal policy is hampered by _____.

© 2013 Pearson CHECKPOINT 32.3 A.loanable funds; production function B.goods and services; labor market C.labor; tax rate D.labor; production function E.labor; tax wedge Question 8 Full employment is determined in the market for ____ and that quantity, along with the ____, determines potential GDP.

© 2013 Pearson CHECKPOINT 32.3 A.increase; increase B.increase; decrease C.decrease; increase D.decrease; decrease E.increase; do not change Question 9 The supply-side effects of an income tax cut ____ potential GDP and ____ aggregate supply.

© 2013 Pearson CHECKPOINT 32.3 A.surplus; increase B.surplus; decrease C.deficit; increase D.deficit; decrease E.balance; not change Question 10 If fiscal stimulus creates a large budget ____, then in the long run, economic growth will ____.