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CEOE Business Education: Fiscal and Monetary Policies Chapter Exam

Exam Instructions:

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

Page 1

Question 1 1. Which of the following tax rates may affect an individual's decision to work harder and earn additional income?

Question 2 2. What are the primary goals of fiscal and monetary policy?

Question 3 3. Decreasing personal tax rates through fiscal policy will most likely result in:

Question 4 4. An expansionary fiscal policy would most likely cause which of the following changes in output and interest rates?

Question 5 5. What is the value of this expansionary gap?

Page 2

Question 6 6. What does a contractionary gap indicate about output in the short-run?

Question 7 7. Why can recognition lag occur?

Question 8 8. According to supply-side economists, how are taxes and economic growth related?

Question 9 9. The government has just lowered personal income taxes. Which of the following best describes the economic effects of this policy?

Question 10 10. What is potential output?

Page 3

Question 11 11. John Maynard Keynes believed that fiscal policy designed to deal with budgets should _____

Question 12 12. All of the following are examples of fiscal policy to lower unemployment, EXCEPT:

Question 13 13. If the supply of money increases, what happens in the money market?

Question 14 14. Which of the following policies would be supported by a supply-side economist?

Question 15 15. When the AD and the SRAS intersect to the left of the vertical LRAS, economists call this:

Page 4

Question 16 16. 'Crowding out' refers to which of the following?

Question 17 17. Which of the following is true about fiscal policy?

Question 18 18. How would we describe an economy that corresponds to the following image?

Question 19 19. Which is true about actual economic output during different times of the business cycle?

Question 20 20. Which of the following reduces the effects of expansionary fiscal policy?

Page 5

Question 21 21. The central idea of supply-side economics is that certain types of tax cuts will increase:

Question 22 22. In general, because of policy lags, which of the following is true?

Question 23 23. Increasing government spending will likely lead to all of the following, EXCEPT:

Question 24 24. Which of the following tax codes is most progressive?

Question 25 25. At full employment levels, how does the SRAS affect price level?

Page 6

Question 26 26. What is a benefit of a contractionary gap?

Question 27 27. When there is a downside gap between actual equilibrium, real GDP, and the full-employment level of real GDP, what do economists call this?

Question 28 28. An economy is facing moderate output growth but significantly high inflation rates. Which of the following policy actions can the Federal Reserve use to address this problem?

Question 29 29. Which of the following statements is NOT true regarding fiscal and monetary policy?

Question 30 30. How do automatic stabilizers benefit the economy?

CEOE Business Education: Fiscal and Monetary Policies Chapter Exam Instructions

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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