Chapter 13--MacroTB - CHAPTER 13 The Government and the...

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135 The Government and the Macroeconomy CHAPTER 13 MULTIPLE-CHOICE 1. The ratio of all levels of government spending to GDP in the United States is about a. 10 percent. b. 50 percent. c. 20 percent. d. 70 percent. e. 36 percent. Answer: e. Section: Overview 2. The ratio of federal government spending to GDP in the United States is about a. 50 percent. b. 40 percent. c. 20 percent. d. 10 percent. e. 35 percent. Answer: c Section: 13.1 3. The budget balance is the a. level of firm investment. b. difference between exports and imports. c. difference between household spending and income. d. difference between tax revenue and government spending. e. difference between movements of assets across countries. Answer: d. Section: 13.1 4. Government expenditures include a. state government spending. b. federal government spending. c. local government spending. d. All of the above. e. None of the above. Answer: d. Section: 13.1 5. The federal government usually finances its budget deficit by a. raising taxes. b. selling its real assets. c. selling government bonds. d. borrowing from commercial banks. e. borrowing from foreign governments. Answer: c. Section: 13.1
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136 | Chapter 13 6. Consider Figure 13.1, which shows the federal government receipts and outlays for the period 1970– 2006, in billions of dollars. The federal government ran a surplus during the period a. 1980–1997. b. 1971–1973. c. 1998–2002. d. 2002–2006. e. Not enough information is given. Answer: c. Section: 13.1 7. Consider Figure 13.2, which shows the federal govern - ment receipts and outlays for the period 1934–2006, as percent of GDP. Which of the following were periods when the federal government ran a budget surplus? a. 1947–1949 b. 1998–2002 c. 1955–1958 d. All of the above. e. None of the above. Answer: d. Section: 13.1 Figure 13.2: Government Spending and Receipts 3,000 BILLIONS $s YEAR Receipts Outlays 2,500 2,000 1,500 1,000 0 500 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 50 45 40 35 30 25 20 15 10 5 0 PERCENT GDP YEAR Outlays Receipts 1934 1938 1942 1946 1950 1954 1958 1962 1966 Figure 13.1: Federal Government Receipts and Outlays
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The Government and the Macroeconomy | 137 8. Consider Figure 13.2, which shows the federal government receipts and outlays for the period 1934– 2006. What was the cause of the huge budget deficit beginning in 1940? a. oil crisis b. World War II c. President Reagan’s defense expenditures d. Vietnam War e. the Volcker recession Answer: b. Section: 13.1 9. Consider Figure 13.2, which shows the federal government receipts and outlays for the period 1934– 2006. The only period(s) in which the federal government ran a budget surplus since 1970 was (were) a. 1998–2002. b. 1970. c. 1973–2001. d. None of the above. e. a and b. Answer: e. Section: 13.1 10. The government debt is a. the total accumulation of past deficits. b. the outstanding stock of bonds that have been issued in the past. c. the annual difference between government spending and tax revenues. d. equal to total tax receipts. e. a and b.
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Chapter 13--MacroTB - CHAPTER 13 The Government and the...

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