Question 1

U.S.public policy discourages saving because

Accepted Answer

A)   other things the same,taxes increase the return from savings.
B)   means tested programs such as Medicaid provide lower benefits to those who did not save.
C)   none of parents' bequest to their children is taxed.
D)   some forms of capital income are taxed twice.E) C) and D)
F) A) and C)

Question 2

The Federal Reserve operates under a rule that requires money supply growth by one percentage point for every percentage point that unemployment rises above its natural rate.

Accepted Answer

A) True 
 B)False

Question 3

The national debt

Accepted Answer

A)   exists because of past government budget deficits.
B)   is the difference between the government's spending and revenue in a given year.
C)   is the amount households owe on credit cards,mortgages and other loans.
D)   is the same as the government's budget deficit.E) B) and C)
F) A) and D)

Question 4

Over time continued budget deficits lead to

Accepted Answer

A)   a higher capital stock and higher real wages.
B)   a higher capital stock and lower real wages.
C)   a lower capital stock and higher real wages.
D)   a lower capital stock and lower real wages.E) A) and B)
F) None of the above

Question 5

The major driver of future federal spending is

Accepted Answer

A)   interest on the federal debt.
B)   Social Security obligations.
C)   rising health care costs.
D)   energy prices.E) A) and D)
F) All of the above

Question 6

A decrease in the tax rate is more likely to increase national saving if

Accepted Answer

A)   the income effect of a change in the interest rate is small and an increase in private saving tends to have a small impact on the capital stock.
B)   the income effect of a change in the interest rate is small and an increase in private saving tends to have a large impact on the capital stock.
C)   the income effect of a change in the interest rate is large and an increase in private saving tends to have a small impact on the capital stock.
D)   the income effect of a change in the interest rate is large and an increase in private saving tends to have a large impact on the capital stock.E) None of the above
F) All of the above

Question 7

Explain how tax provisions to encourage private saving may reduce national saving.

Accepted Answer

Without careful planning it is possible ...

Question 8

Which country does not use inflation targeting in its monetary policy process?

Accepted Answer

A)   United States.
B)   New Zealand.
C)   Mexico.
D)   Australia.E) A) and B)
F) B) and C)

Question 9

Studies have shown significant spending changes arise from interest rate changes only after

Accepted Answer

A)   a few days.
B)   a few weeks.
C)   a few months.
D)   a few years.E) A) and B)
F) A) and C)

Question 10

Is it possible that deficits do not burden future generations?

Accepted Answer

Some programs,such as Social Security,ta...

Question 11

Proponents of zero-inflation policies acknowledge that the public is unconcerned about the inflation rate.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following likely occurs when households and firms are pessimistic?

Accepted Answer

A)   Increased spending,increases aggregate demand,rising real GDP and a falling unemployment rate.
B)   Decreased spending,increases aggregate demand,rising real GDP and a falling unemployment rate.
C)   Decreased spending,decreased aggregate demand,falling real GDP and a falling unemployment rate.
D)   Decreased spending,decreased aggregate demand,falling real GDP and a rising unemployment rate.E) All of the above
F) None of the above

Question 13

What's the basis for arguing that deficits are likely to lead to lower living standards in the future?

Accepted Answer

A government deficit means that the gove...

Question 14

Proponents of a balanced government budget acknowledge that running a budget deficit is justifiable in time of war.

Accepted Answer

A) True 
 B)False

Question 15

The Federal Reserve will tend to tighten monetary policy when

Accepted Answer

A)   interest rates are rising too rapidly.
B)   it thinks the unemployment rate is too high.
C)   the growth rate of real GDP is quite sluggish.
D)   it thinks inflation is too high today,or will become too high in the future.E) A) and B)
F) A) and C)

Question 16

Many studies indicate changes in monetary policy have most of their effect on aggregate demand about six months after the change is made.

Accepted Answer

A) True 
 B)False

Question 17

If the central bank has discretion to make policy,it may create economic fluctuations that reflect the electoral calendar.This is called the political business cycle.

Accepted Answer

A) True 
 B)False

Question 18

Social Security and government health-insurance programs account for

Accepted Answer

A)   less than 2% of the federal spending.
B)   5.2% of federal spending.
C)   42% of federal spending.
D)   52% of federal spending.E) A) and B)
F) All of the above

Question 19

Inflation reduction has the lowest cost when the efforts are

Accepted Answer

A)   credible so that the sacrifice ratio is low.
B)   credible so that the sacrifice ratio is high.
C)   unexpected so that the sacrifice ratio is high.
D)   unexpected so that the sacrifice ratio is low.E) None of the above
F) B) and D)

Exam 36: Five Debates Over Macroeconomic Policy

If the central bank has discretion to make policy,it may create economic fluctuations that reflect the electoral calendar.This is called the political business cycle.

Correct Answer
verified

Proponents of zero-inflation policies acknowledge that the public is unconcerned about the inflation rate.

Correct Answer
verified

U.S.public policy discourages saving because

Correct Answer
verified

What's the basis for arguing that deficits are likely to lead to lower living standards in the future?

Correct Answer
verified
A government deficit means that the gove...
View Answer

Social Security and government health-insurance programs account for

Correct Answer
verified

Proponents of a balanced government budget acknowledge that running a budget deficit is justifiable in time of war.

Correct Answer
verified

Which of the following likely occurs when households and firms are pessimistic?

Correct Answer
verified

Explain how tax provisions to encourage private saving may reduce national saving.

Correct Answer
verified
Without careful planning it is possible ...
View Answer

The Federal Reserve operates under a rule that requires money supply growth by one percentage point for every percentage point that unemployment rises above its natural rate.

Correct Answer
verified

A decrease in the tax rate is more likely to increase national saving if

Correct Answer
verified

Over time continued budget deficits lead to

Correct Answer
verified

Which country does not use inflation targeting in its monetary policy process?

Correct Answer
verified

Inflation reduction has the lowest cost when the efforts are

Correct Answer
verified

Is it possible that deficits do not burden future generations?

Correct Answer
verified
Some programs,such as Social Security,ta...
View Answer

Many studies indicate changes in monetary policy have most of their effect on aggregate demand about six months after the change is made.

Correct Answer
verified

The national debt

Correct Answer
verified

The Federal Reserve will tend to tighten monetary policy when

Correct Answer
verified

Studies have shown significant spending changes arise from interest rate changes only after

Correct Answer
verified

The major driver of future federal spending is

Correct Answer
verified

Exam 36: Five Debates Over Macroeconomic Policy

If the central bank has discretion to make policy,it may create economic fluctuations that reflect the electoral calendar.This is called the political business cycle.

Correct AnswerverifiedShow Answer

Proponents of zero-inflation policies acknowledge that the public is unconcerned about the inflation rate.

Correct AnswerverifiedShow Answer

U.S.public policy discourages saving because

Correct AnswerverifiedShow Answer

What's the basis for arguing that deficits are likely to lead to lower living standards in the future?

Correct AnswerverifiedA government deficit means that the gove...View AnswerShow Answer

Social Security and government health-insurance programs account for

Correct AnswerverifiedShow Answer

Proponents of a balanced government budget acknowledge that running a budget deficit is justifiable in time of war.

Correct AnswerverifiedShow Answer

Which of the following likely occurs when households and firms are pessimistic?

Correct AnswerverifiedShow Answer

Explain how tax provisions to encourage private saving may reduce national saving.

Correct AnswerverifiedWithout careful planning it is possible ...View AnswerShow Answer

The Federal Reserve operates under a rule that requires money supply growth by one percentage point for every percentage point that unemployment rises above its natural rate.

Correct AnswerverifiedShow Answer

A decrease in the tax rate is more likely to increase national saving if

Correct AnswerverifiedShow Answer

Over time continued budget deficits lead to

Correct AnswerverifiedShow Answer

Which country does not use inflation targeting in its monetary policy process?

Correct AnswerverifiedShow Answer

Inflation reduction has the lowest cost when the efforts are

Correct AnswerverifiedShow Answer

Is it possible that deficits do not burden future generations?

Correct AnswerverifiedSome programs,such as Social Security,ta...View AnswerShow Answer

Many studies indicate changes in monetary policy have most of their effect on aggregate demand about six months after the change is made.

Correct AnswerverifiedShow Answer

The national debt

Correct AnswerverifiedShow Answer

The Federal Reserve will tend to tighten monetary policy when

Correct AnswerverifiedShow Answer

Studies have shown significant spending changes arise from interest rate changes only after

Correct AnswerverifiedShow Answer

The major driver of future federal spending is

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A government deficit means that the gove...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Without careful planning it is possible ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Some programs,such as Social Security,ta...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified