Econ quiz 17/18

Question 1

T/F The united states is currently running a budget surplus

Answer 1

False

Question 2

T/F Nearly all states have balanced budget laws

Answer 2

True

Question 3

By definition, a federal budget deficit occurs

Answer 3

When the federal gov spends more money than it receives in taxes

Question 4

All of the following except for ______ are part of mandatory (direct) spending and are automatically included in the federal budget of the US

Answer 4

National defense

Question 5

T/F one of the largest expenditures of US federal gov spending is on transportation

Answer 5

False

Question 6

An example of regressive tax is

Answer 6

Social Security tax

Question 7

T/F as a % of GDP, US federal spending has risen in recent years after averaging 20% of GDP since the 1950s

Answer 7

True

Question 8

Increases in Aggregate Demand would lead to ____ ceteris paribus

Answer 8

Increased tax payments (receipts)

Question 9

T/F once the US federal Budget is passed there can no other spending apporpriations for that fiscal year

Answer 9

False

Question 10

Which of the following is most likely to be true in the US during an economic recession

Answer 10

The federal Gov will increase spending

Question 11

T/F US politicians prefer contractionary fiscal policies

Answer 11

False

Question 12

_____ are a form of tax and spending rules that impact aggregate demand without any additional change in legislation

Answer 12

Automatic Stabilizers

Question 13

T/F Increases in Agg. Demand will lead to a decrease in tax revenues (payments) collected and increase the need for gov borrowing

Answer 13

False

Question 14

an unintended consequence of increase agg. demand due to increased gov. spending is

Answer 14

an increase in interest rates crowding out business investment

Question 15

T/F Gov borrowing and spending many result in reduced, or delayed, business investment and household consumption

Answer 15

True

Question 16

When the fed. gov. is a borrower or demander of financial capital, which of the following may occur

Answer 16

Households may save more (increased private savings)

Question 17

The two main sources of US financial capital (supplied) are from

Answer 17

Private savings and inflows of foreign capital

Question 18

What might be an effect of an increase in the budget deficit

Answer 18

The trade deficit also increases

Question 19

An increase in the gov.’s budget deficit will cause the inerest rate to

Answer 19

increase

Question 20

T/F The US gov has never run a budget surplus

Answer 20

False

Question 21

The theory that rational private households might shift their saving to offset gov saving or borrowing is known as

Answer 21

Ricardian Equivalence Theory

Question 21

A prolonged period of budget deficits may lead to ______

Answer 21

Lower economic growth

Question 22

T/F the US gov. is required by law to balance the federal budget

Answer 22

False

Question 23

A _______ can become a cause for concern among international investors

Answer 23

Sustained period of large budget deficits

Question 24

T/F according to the congressional budget office, the federal debt is projected to decrease over the next 30 years

Answer 24

False