Final Practice Exam (multiple choice questions)

Final Practice Exam (multiple choice questions) -...

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final(practice) Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. During the 2004 election, the debate over fiscal policy focused on a. tax cuts for households and businesses in different income brackets. b. tax cuts for households versus government spending for homeland security. c. raising taxes on low and middle-income households versus raising taxes on high-income households. d. how to balance the government budget through either raising taxes or cutting government spending. ____ 2. Taxes are the difference between a. GDP and net exports. b. GDP and consumer spending. c. Consumer spending and saving. d. GDP and disposable income. ____ 3. Personal income taxes and corporate income taxes are examples of ____ taxes. a. variable b. sales c. fixed d. disposable ____ 4. During the period from 2001 to 2006, there will be several major cuts in personal income tax rates. What effect will these have on the value of the multiplier? a. They will decrease the value of the multiplier. b. They will have no effect on the multiplier. c. They will increase the value of the multiplier. d. The effect is uncertain. ____ 5. How does an increase in government transfer payments affect aggregate demand? a. It has the same effect as a tax increase, which lowers AD with a larger multiplier than a spending decrease. b. It has the same effect as a tax cut, which increases AD but with a smaller multiplier than a change in spending. c. It has the same effect as a spending increase, which increases AD with a larger multiplier than a tax cut. d. It has the same effect as a spending decrease, which increases AD with a larger multiplier than a spending decrease. ____ 6. You are a member of the Japanese Diet in 2001 when the economy is in a recessionary gap. If your goal is to achieve full employment, you should vote for a. decreased government purchases, increased taxes, and a cut in transfer payments. b. a balanced federal budget. c. increased government purchases, decreased taxes, and an increase in transfer payments. d. increased government purchases and transfer payments, and an equal increase in taxes. Figure 11-1 1
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____ 7. In Figure 11-1, to achieve equilibrium at potential GDP the government could a. increase taxes. b. decrease transfer payments. c. increase government purchases. d. None of the above is correct. ____ 8. Assume that the government is considering different policies to increase total expenditures in order to reduce unemployment. Which of the following would achieve this objective? a. decreasing taxes b. increasing government spending c. increasing transfer payments d. All of the above are correct. ____ 9.
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Final Practice Exam (multiple choice questions) -...

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