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Unformatted text preview: Chapter 27 / 11 Fiscal Policy 1) BM27 \ C \\ Fiscal Policy \ 2 \\ Government policies to alter levels of economic activity by changing tax rates, revenues, or government spending, are: (a) supply-side policies. (b) automatic stabilizers. (c) fiscal policies. (d) classical macroeconomic policies. 2) BM27 \ B \\ Fiscal Policy \ 2 \\ The macroeconomic effects of federal taxation are least central to the concept of: (a) fiscal drag. (b) excess capacity theorems. (c) structural budget deficits or surpluses. (d) cyclical budget deficits. (e) Laffer curves. 3) BM27 \ C \\ Government Budgets \ 1 \\ When government’s tax revenues exceed its outlays there is a: (a) budgetary deficit. (b) fiscal crisis. (c) budgetary surplus. (d) growing national debt. (e) depressed economy. 4) BM27 \ E \\ Government Budgets \ 1 \\ The government budget is running a surplus when its: (a) outlays = tax revenues. (b) tax rates exceed tax revenues. (c) outlays exceed its tax revenues. (d) expenditures = tax revenues + bond financing. (e) tax revenues exceed its outlays. Ralph Byrns Chapter 27 / 11 : Fiscal Policy Test Bank Two 1 5) BM27 \ A \\ Budget Deficits and Surpluses\ 1 \\ If government purchases and transfer payments exceed government revenues there is a: (a) budget deficit. (b) bias towards inflation. (c) budget surplus. (d) macroeconomic equilibrium. 6) BM27 \ C \\ Government Spending \ 2 \\ The level and rate of growth of government spending are probably most influenced by the: (a) annual percentage rate of change in national income. (b) volatility of prices for financial instruments in the stock market. (c) state of international relations and domestic politics. (d) national rate of unemployment and the overall health of the economy. 7) BM27 \ B \\ Government Expenditures \ 2 \\ If the Pima County Sheriff’s Department hires three more deputies, this shows up directly in the Aggregate Expenditures model as an increase in: (a) transfer payments. (b) government purchases. (c) tax collections. (d) tax rates. 8) BM27 \ A \\ Discretionary Fiscal Policy \ 1 \\ New laws that alter taxes and government outlays to stabilize the economy are part of: (a) discretionary fiscal policy. (b) automatic monetary policy. (c) wage-price controls. (d) industrial policy. 9) BM27 \ C \\ Discretionary Fiscal Policy \ 2 \\ Discretionary Keynesian fiscal policies regulate: (a) output structures by setting production quotas. (b) wages and other production costs by imposing ceilings. (c) Aggregate Demand by changing taxes and government spending. (d) investment by altering the investment accelerator. 10) BM27 \ A \\ Discretionary Fiscal Policy \ 1 \\ Discretionary fiscal policy enacted by the federal government: (a) involves legislative changes of tax policy or budgetary outlays....
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