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Fiscal & Monetary Policies in Economics 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!

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Question 1 1. If expansionary fiscal policy is necessary, what changes should the government make to spending or taxes?

Question 2 2. How would a government most likely change its tax rates during a recession? Why?

Question 3 3. According to supply-side economists, how are taxes and economic growth related?

Question 4 4. Increasing individual tax rates through fiscal policy will most likely have which effect on the economy?

Question 5 5. According to Keynesian economists, if the federal government attempts to balance the budget when the economy is in a recessionary gap, what effect will this have?

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Question 6 6. Which of the following statements is FALSE regarding the government's fiscal policy toolkit?

Question 7 7. Which of the following will a Keynesian economist most likely favor if the economy is operating at point a?

Question 8 8. According to Keynesian economists, if policymakers thought the economy was headed into a recession, what action would be most appropriate?

Question 9 9. Which of the following statements is NOT true regarding fiscal and monetary policy?

Question 10 10. What is a progressive tax code?

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Question 11 11. Which of the following reduces the effects of expansionary fiscal policy?

Question 12 12. If the economy is suffering from extremely high rates of inflation, how should the government intervene from the standpoint of a classical economist?

Question 13 13. Which of the following statements is TRUE of expansionary monetary policy during a recession?

Question 14 14. Which of the following policies is a component of supply-side fiscal policy?

Question 15 15. Which of the following will most likely be favored by a Keynesian economist if the economy is experiencing a recessionary gap?

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Question 16 16. Suppose the President plans to cut taxes for consumers and also plans to increase defense spending. How will real GDP and the price level be affected?

Question 17 17. Assume the economy is in a recession and the Federal Reserve takes the appropriate monetary policy actions. Which of the following shows the affect of the monetary policy?

Question 18 18. Why can recognition lag occur?

Question 19 19. When the Federal Reserve lowers the discount rate, what will happen?

Question 20 20. Which of the following tax rates may affect an individual's decision to work harder and earn additional income?

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Question 21 21. If in fiscal year 2010, the federal government receives $1,800 billion in revenues and spends $1,550 billion on goods and services, what will happen to the national debt?

Question 22 22. When the economy is growing too slowly (recession) or too quickly (high inflation), the two approaches the government can use, according to economists, include which of the following?

Question 23 23. Which of the following is an example of contractionary monetary policy?

Question 24 24. What is the appropriate contractionary fiscal policy response when inflation goes from a 3% to 10% annual rate and real GDP rises from 2% to 10%?

Question 25 25. Which of the following is true about fiscal policy?

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Question 26 26. The expansionary monetary policy is designed to:

Question 27 27. Increasing government spending will likely lead to all of the following, EXCEPT:

Question 28 28. Which of the following will most likely result, due to the replacement of some portion of the federal personal income tax with a national sales tax?

Question 29 29. What is a policy lag?

Question 30 30. Contractionary fiscal policy is used to offset which of the following?

Fiscal & Monetary Policies in Economics 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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