Question: Question: Considering the figure, the macro equilibrium occurs where the real GDP (Y) equals ______.
Answer Choices:
$5,000
$6,000
$7,000
Answer: $6,000
Question: Question: In a Keynesian cross diagram, what name is given to the distance between an output level that is below potential GDP?
Answer Choices:
Recessionary gap
Inflationary gap
Answer: Recessionary gap
Question: Question: The quantity of output that the economy can produce when it is at full employment of its labor and physical capital is the definition for:
Answer Choices:
Equilibrium GDP
Gap GDP
Potential real GDP
Answer: Potential real GDP
Question: Question: One of the most important components to understand about the Income-Expenditure model is that as GDP (or national income) increases ______ increases as well.
Answer Choices:
Aggregate demand
Aggregate expenditure
Aggregate supply
Answer: Aggregate expenditure
Question: Question: Say that an economy is defined by the following algebraic equation: C = 322 + 0.7 (Yd). What does the algebraic equation represent?
Answer Choices:
Consumption function
Savings function
Answer: Consumption function
Question: During an inflationary gap due to overly sufficient aggregate demand, the government should ______ spending by an amount determined by the spending multiplier in an attempt to return the economy to potential GDP/full employment.
Answer Choices:
stay the same
increase
decrease
Answer: decrease
Question: In a Keynesian cross diagram, what name is given to the distance between an output level that is above potential GDP?
Answer Choices:
expenditure-output
inflationary gap
recessionary gap
Answer: inflationary gap
Question: Which category accounts for most of the spending by state and local governments?
Answer Choices:
national defense
Social Security
education
Answer: education
Question: Sales taxes are ______.
Answer Choices:
imposed as a percentage of the value of the purchase.
generally considered to be progressive.
a tax burden that is entirely paid by consumers.
Answer: imposed as a percentage of the value of the purchase.
Question: If Congress wanted to implement a tax cut during a recession but had to keep a balanced budget, what would need to do?
Answer Choices:
The government would have to increase spending.
The government would have to cut taxes in another area.
The government would have to reduce spending.
Answer: The government would have to reduce spending.
Question: The state of Montana has a balanced budget law runs a budget deficit. What are the state’s options to correct a deficit?
Answer Choices:
an increase in taxes
taking out a loan from state banks
an increase in spending
Answer: an increase in taxes
Question: According to the Keynesian approach to fiscal policy
Answer Choices:
The crowding out effect is a significant problem that reduces the aggregate demand.
The crowding out effect is a significant problem that reduces the effectiveness of expansionary fiscal policy.
The crowding out effect is quite limited as the demand for private loans is low in times of recessions.
Answer: The crowding out effect is quite limited as the demand for private loans is low in times of recessions.
Question: Which of the following statements about government spending is true?
Answer Choices:
The shares of social security and health care spending in GDP have grown steadily since the 1960’s.
The share of defense spending in GDP has increased substantially since the 1960’s.
Interest payments on government debt are not counted as part of government spending.
Answer: The shares of social security and health care spending in GDP have grown steadily since the 1960’s.
Question: Ari’s income and federal income tax contributions are in the table below. What is the federal income tax in Ari’s country? | Taxable Income | Federal Income Tax Payment | | 2016 | $80,000 | $10,000 | | 2017 | $94,000 | $11,750 |
Answer Choices:
proportional
regressive
progressive
Answer: progressive
Question: In 2016, the federal government spent $200 billion but collected $180 billion in taxes, therefore in 2016, the government accumulated
Answer Choices:
a federal debt of $680 billion.
a budget surplus of $20 billion.
a budget deficit of $20 billion.
Answer: a budget deficit of $20 billion
Question: Banks are financial intermediaries because they
Answer Choices:
hold all the money in the economic system in currency form.
print money as needed for borrowers whether business, individual, or government entities.
link savers who deposit money and borrowers who seek loans.
Answer: link savers who deposit money and borrowers who seek loans.
Question: Of the following descriptions, which characteristic is a true statement about money?
Answer Choices:
A government must back it.
Generally it doesn’t have to be accepted as a means of payment.
It must represent value.
Answer: It must represent value.
Question: An asset in a bank’s T-account is _______.
Answer Choices:
something the bank owes someone else.
how much the bank is worth.
something owned by the bank.
Answer: something owned by the bank.
Question: _______ means that consumers make decisions across time about when they will consume goods, including money, either in the future or at the present time.
Answer Choices:
Intertemporal decision making
The law of supply
Consumer determined decisions
Answer: Intertemporal decision making