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FISCAL POLICY 2 - Chapter 27 11 Fiscal Policy 1 CM27 C...

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Chapter 27 / 11 Fiscal Policy 1) CM27 \ C \\ Fiscal Policy\ 2 \\ Countercyclical fiscal policies of the U.S. government: (a) began prior to World War I. (b) operated during the early 1930s, based on Keynesian theory. (c) were legally mandated by the Employment Act of 1946. (d) have been totally rejected in recent policy debates. 2) CM27 \ D \\ Macroeconomic Goals \ 2 \\ The explicit goals of modern fiscal policy in the United States do not include maximum: (a) employment. (b) purchasing power. (c) economic growth. (d) stability of the price level. 3) CM27 \ D \\ Government Budgets \ 1 \\ The government operates a balanced budget when: 4) CM27 \ B \\ Budget Surpluses or Deficits \ 2 \\ Annual differences between federal outlays and receipts are: (a) public debt. (b) budget deficits or surpluses. (c) trade deficits. (d) budget constraints. 5) CM27 \ D \\ Government Budgets \ 1 \\ In simple Keynesian models of Aggregate Expenditures, government tax revenues minus transfer payments equal: Ralph Byrns Chapter 27 / 11 : Fiscal Policy Test Bank Three 1
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6) CM27 \ D \\ Government Outlays\ 2 \\ In the simple Keynesian expenditure model, the public sector includes the budgets of: 7) CM27 \ B \\ Government Expenditures \ 2 \\ If Provo, Utah spends local funds to build a new fire station, this increases Aggregate: (a) Demand by increasing government transfer payments. (b) Demand by increasing government purchases. (c) Supply by crowding-out private investment. (d) Supply by raising interest rates paid to savers. 8) CM27 \ E \\ Discretionary Fiscal Policy \ 2 \\ Discretionary fiscal policies include: (a) printing money to cover recurrent federal deficits. (b) transfer payments. (c) Social Security payments. (d) progressive tax rates. (e) laws that change the structure of tax rates. 9) CM27 \ C \\ Discretionary Fiscal Policy \ 2 \\ Discretionary fiscal policies are attempts to alter economic activity by changing: (a) autonomous consumption and investment. (b) the money supply. (c) laws controlling government outlays and taxes. (d) automatic stabilizers. 10) CM27 \ A \\ Discretionary Fiscal Policy \ 1 \\ Discretionary fiscal policy is an attempt to improve the macroeconomic environment through: © 2006 Economics Interactive .com Contemporary Economics 2
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