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: 3. If a government wants to pursue an expansionary fiscal policy, then a tax cut of a certain size will be more expansionary the: 4. To understand the quantitative significance of the public debt relative to the economy, it should be: 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:
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: The following is budget information for a hypothetical economy. All data are in billions of dollars.
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