Fiscal Policy 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. In a certain fiscal year, the federal government receives $4 trillion in revenue and spends $3.8 trillion for goods and services. What effect would this have on the national debt?

Question 2 2. Which of the following BEST describes crowding out?

Question 3 3. Why can crowding out have a strong impact on the economy?

Question 4 4. Why is the income tax relevant to the federal government?

Question 5 5. Which of the following is an example of a budget surplus?

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Question 6 6. If the shortfall in aggregate demand (AD) is $100 million and the marginal propensity to consume (MPC) is 0.7, how much fiscal stimulus from government purchases is needed to bring the economy to potential?

Question 7 7. Which of these government actions would be considered fiscal stimulus?

Question 8 8. If the desired fiscal stimulus is $50 million and the marginal propensity to consume (MPC) is 0.8 how much should taxes be cut to bring the economy to potential?

Question 9 9. If there is a $75 million shortfall in aggregate demand, the amount of fiscal stimulus needed to close the shortfall is:

Question 10 10. Which of these describes the multiplier effect?

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Question 11 11. Why do citizens often criticize pork barrel spending?

Question 12 12. How do congressmen add pork barrel spending projects to a bill?

Question 13 13. Which is an example of pork barrel spending?

Question 14 14. Why do congressman seek pork barrel spending for their districts?

Question 15 15. How did Super Storm Sandy aid become subject to pork barrel spending?

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Question 16 16. Which of the following is the BEST explanation of how a government intervenes in an economy utilizing fiscal policy?

Question 17 17. How does a government implement a contractionary fiscal policy?

Question 18 18. Which of the following is the BEST explanation of monetary policy?

Question 19 19. If the government wants to increase the rate of economic growth, what type of monetary policy will it implement?

Question 20 20. What is the cyclical growth and decline of an economy called?

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Question 21 21. Why can recognition lag occur?

Question 22 22. Which of the following statements is NOT true regarding fiscal and monetary policy?

Question 23 23. How do lag times differ between monetary policy implementation and fiscal policy implementation?

Question 24 24. What is a policy lag?

Question 25 25. In general, because of policy lags, which of the following is true?

Fiscal Policy 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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