Pre-Test Chap 30 e18 - Pre-Test Chap 30 e18 Student: _ 1....

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Pre-Test Chap 30 e18 Student: ___________________________________________________________________________ 1. An economy is experiencing a high rate of inflation. The government wants to reduce consumption by $36 billion to reduce inflationary pressure. The MPC is .75. By how much should the government raise taxes to achieve its objective? A. $6 billion B. $9 billion C. $12 billion D. $16 billion 2. In the last quarter of 2007: A. Congress carried out contractionary policy by increasing taxes B. Households reduced their spending as a result of a crisis in credit markets C. Congress carried out expansionary policy by increasing government spending D. The economy began to recover from recession 3. If a government wants to pursue an expansionary fiscal policy, then a tax cut of a certain size will be more expansionary the: A. Smaller is the economy's MPS B. Larger is the economy's MPS C. Smaller is the economy's MPC D. Larger is the unemployment rate 4. To understand the quantitative significance of the public debt relative to the economy, it should be: A. Divided by the social security trust fund B. Multiplied by the size of the population C. Measured as a percentage of GDP D. Compared to the value of imports and exports 5. If the Congress passes legislation to cut taxes to counter the effects of a severe recession, then this would be an example of a: A. Political business cycle B. Contractionary fiscal policy C. Expansionary fiscal policy D. Nondiscretionary fiscal policy 6. If the standardized budget shows a deficit of about $100 billion and the actual budget shows a deficit of about $150 billion over a several-year period, it can be concluded that there is a: A. Cyclical deficit B. Contractionary fiscal policy C. Proportional tax system D. Progressive tax system
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7. The United States is experiencing recession, so Congress adopts an expansionary fiscal policy. State governments face a budget shortfall and raise taxes to balance their budgets. The actions of state governments would: A. Slightly increase aggregate supply B. Slightly increase aggregate demand C. Partially reinforce the fiscal policy D. Partially offset the fiscal policy The following is budget information for a hypothetical economy. All data are in billions of dollars. 8. Refer to the above data. The budget deficit was $75 billion in: A. Year 2 B. Year 3 C. Year 4 D. Year 5 The following is budget information for a hypothetical economy. All data are in billions of dollars. 9. Refer to the above data. In which year is there a budget surplus?
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This note was uploaded on 05/23/2010 for the course ECON 101 taught by Professor Keep during the Spring '10 term at Glendale Community College.

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Pre-Test Chap 30 e18 - Pre-Test Chap 30 e18 Student: _ 1....

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