Question 1

A credit rating provides information on an investor's level of default risk. The highest rating is

Accepted Answer

A)   AAA.
B)   BB.
C)   AA+.
D)   A+.
E)   AAB.F) A) and C)
G) A) and B)

Question 2

If you take a HECS-HELP student loan and repay after you graduate, you redistribute your income. In particular you consume ________ than your income when you are young and in university and ________ your income after you graduate.

Accepted Answer

A)   less, more than
B)   more; more than
C)   more; less than
D)   less; less than
E)   None of the aboveF) A) and D)
G) A) and B)

Question 3

The table above gives a nation's government outlays and tax revenues for 2008 through to 2012.
-Based on the table above, during which years did the country have a budget deficit?

Accepted Answer

A)   2008 and 2009
B)   2012 only
C)   2011 only
D)   2010 and 2012
E)   All except 2011F) All of the above
G) A) and E)

Question 4

The figure above shows a labour market with an income tax.
-The tax wedge in the figure above is equal to ________ per hour, which creates an after-tax real wage rate of ________ per hour and employment of ________ billion hours per year.

Accepted Answer

A)   $5; $35; 200
B)   $10; $35; 250
C)   $15; $30; 250
D)   $15; $20; 200
E)   $10; $35; 200F) C) and D)
G) A) and C)

Question 5

If the Commonwealth government cuts taxes by $10 billion, aggregate demand

Accepted Answer

A)   decreases by $10 billion
B)   decreases by $10 billion multiplied by the tax multiplier.
C)   increases by $10 billion.
D)   increases by $10 billion multiplied by the government expenditure multiplier.
E)   increases by $10 billion multiplied by the tax multiplier.F) All of the above
G) D) and E)

Question 6

Which of the following is a limitation of discretionary fiscal policy?
i. The legislation time lag
ii. Estimating potential GDP
iii. The income gap

Accepted Answer

A)   i only
B)   ii only
C)   iii only
D)   i and ii
E)   i, ii and iiiF) A) and C)
G) B) and C)

Question 7

-When the government's expenses exceed its revenues, the government debt

Accepted Answer

A)   shrinks thanks to the budget deficit.
B)   grows to finance the budget surplus.
C)   grows to finance the budget deficit.
D)   shrinks thanks to the budget surplus.
E)   does not change because it has nothing to do with government outlays and tax revenue.F) None of the above
G) A) and C)

Question 8

The table above gives a nation's government outlays and tax revenues for 2008 through to 2012.
-Based on the table above, during which years did the country have a budget surplus?

Accepted Answer

A)   2008 and 2009
B)   2012 only
C)   2011 only
D)   2010 and 2012
E)   All except 2011F) A) and E)
G) B) and C)

Question 9

The largest source of Commonwealth government revenue in the 2017/18 budget was

Accepted Answer

A)   indirect taxes like the GST.
B)   company tax.
C)   non-tax revenue.
D)   taxes on individuals such as income tax.
E)   taxes on the sale of beer and tobacco.F) B) and D)
G) C) and E)

Question 10

If a tax cut increases aggregate demand more than aggregate supply, real GDP ________ and the price level ________.

Accepted Answer

A)   increases; does not change
B)   decreases; rises
C)   increases; rises
D)   decreases; falls
E)   increases; fallsF) B) and D)
G) None of the above

Question 11

If the government uses fiscal policy to close a recessionary gap,

Accepted Answer

A)   government expenditure can be increased by less than the gap because of the government expenditure multiplier.
B)   government expenditure must be increased by more than the gap because of the government expenditure multiplier.
C)   taxes must be raised by more than the gap because of the tax multiplier.
D)   taxes can be raised by less than the gap because of the tax multiplier.
E)   taxes must be cut by more than the gap because of the tax multiplier.F) A) and B)
G) B) and E)

Question 12

0 to AD1 and from AS0 to AS1 is the result of fiscal policy. If the effect on aggregate supply was larger than the figure above shows, as a result the price level would be ________ 110 and real GDP would be ________ $17 trillion. A)  higher than; larger than B)  smaller than; less than C)  equal to; equal to D)  smaller than; larger than E)  equal to; larger than" class="answers-bank-image d-inline" rel="preload" > The figure above shows an economy's aggregate demand curve and aggregate supply curve.
-Suppose the shift from AD0 to AD1 and from AS0 to AS1 is the result of fiscal policy. If the effect on aggregate supply was larger than the figure above shows, as a result the price level would be ________ 110 and real GDP would be ________ $17 trillion.

Accepted Answer

A)   higher than; larger than
B)   smaller than; less than
C)   equal to; equal to
D)   smaller than; larger than
E)   equal to; larger thanF) B) and E)
G) A) and B)

Question 13

Automatic changes in tax revenues and expenses that occur as a result of fluctuations in real GDP are referred to as automatic

Accepted Answer

A)   taxes and expenditure.
B)   government.
C)   discretionary taxes and expenditure.
D)   discretionary policy.
E)   stabilisers.F) C) and E)
G) A) and B)

Question 14

Income taxes create a wedge between the wage rate paid by ________ and received by workers and thereby ________ employment and ________ potential GDP.

Accepted Answer

A)   firms; raises; increases
B)   firms; raises; decreases
C)   firms; lowers; increases
D)   firms; lowers; decreases
E)   households; lowers; decreasesF) A) and B)
G) A) and E)

Question 15

Once supply-side effects are taken into account, income tax cuts can change
i. the supply of labour.
ii. potential GDP.
iii. the growth rate of potential GDP.

Accepted Answer

A)   ii only
B)   i only
C)   i and ii
D)   iii only
E)   i and iiiF) D) and E)
G) None of the above

Question 16

-The government debt is the amount

Accepted Answer

A)   by which government revenue exceeds expenses in a given year.
B)   of government outlays summed over time.
C)   of all future entitlement spending.
D)   of debt outstanding that arises from past budget deficits.
E)   by which government expenses exceed revenue in a given year.F) A) and E)
G) B) and D)

Question 17

If the income tax rate is 20 per cent and the tax rate on consumption expenditure is 15 per cent, then the tax wedge is

Accepted Answer

A)   5 per cent.
B)   2 per cent.
C)   35 per cent.
D)   300 per cent.
E)   None of the above answers is correct.F) A) and C)
G) A) and E)

Question 18

When revenues ________ expenses is negative, then the government has a budget ________.

Accepted Answer

A)   plus; deficit
B)   minus; deficit
C)   divided by; surplus
D)   minus; surplus
E)   plus; surplusF) B) and E)
G) A) and B)

Question 19

If fiscal stimulus creates a large budget ________, then in the long run economic growth ________.

Accepted Answer

A)   surplus; decreases
B)   surplus; increases
C)   deficit; increases
D)   deficit; decreases
E)   None of the above answers is correct.F) B) and E)
G) A) and B)

Question 20

When the government's expenses equal its revenues, then the budget

Accepted Answer

A)   is in deficit.
B)   is in surplus.
C)   is legal only because expenditures equal tax revenues.
D)   is balanced.
E)   could be either in surplus or deficit.F) A) and B)
G) C) and D)

Exam 14: Fiscal Policy

When revenues expenses is negative, then the government has a budget .

Correct Answer
verified

If the income tax rate is 20 per cent and the tax rate on consumption expenditure is 15 per cent, then the tax wedge is

Correct Answer
verified

Once supply-side effects are taken into account, income tax cuts can change i. the supply of labour. ii. potential GDP. iii. the growth rate of potential GDP.

Correct Answer
verified

If fiscal stimulus creates a large budget , then in the long run economic growth .

Correct Answer
verified

If the government uses fiscal policy to close a recessionary gap,

Correct Answer
verified

Correct Answer
verified

The table above gives a nation's government outlays and tax revenues for 2008 through to 2012. -Based on the table above, during which years did the country have a budget deficit?

Correct Answer
verified

The table above gives a nation's government outlays and tax revenues for 2008 through to 2012. -Based on the table above, during which years did the country have a budget surplus?

Correct Answer
verified

A credit rating provides information on an investor's level of default risk. The highest rating is

Correct Answer
verified

Automatic changes in tax revenues and expenses that occur as a result of fluctuations in real GDP are referred to as automatic

Correct Answer
verified

-When the government's expenses exceed its revenues, the government debt

Correct Answer
verified

The largest source of Commonwealth government revenue in the 2017/18 budget was

Correct Answer
verified

The figure above shows a labour market with an income tax. -The tax wedge in the figure above is equal to per hour, which creates an after-tax real wage rate of per hour and employment of billion hours per year.

Correct Answer
verified

If a tax cut increases aggregate demand more than aggregate supply, real GDP and the price level .

Correct Answer
verified

-The government debt is the amount

Correct Answer
verified

If the Commonwealth government cuts taxes by $10 billion, aggregate demand

Correct Answer
verified

Which of the following is a limitation of discretionary fiscal policy? i. The legislation time lag ii. Estimating potential GDP iii. The income gap

Correct Answer
verified

When the government's expenses equal its revenues, then the budget

Correct Answer
verified

If you take a HECS-HELP student loan and repay after you graduate, you redistribute your income. In particular you consume than your income when you are young and in university and your income after you graduate.

Correct Answer
verified

Income taxes create a wedge between the wage rate paid by and received by workers and thereby employment and potential GDP.

Correct Answer
verified

Exam 14: Fiscal Policy

When revenues ________ expenses is negative, then the government has a budget ________.

Correct AnswerverifiedShow Answer

If the income tax rate is 20 per cent and the tax rate on consumption expenditure is 15 per cent, then the tax wedge is

Correct AnswerverifiedShow Answer

Once supply-side effects are taken into account, income tax cuts can change i. the supply of labour. ii. potential GDP. iii. the growth rate of potential GDP.

Correct AnswerverifiedShow Answer

If fiscal stimulus creates a large budget ________, then in the long run economic growth ________.

Correct AnswerverifiedShow Answer

If the government uses fiscal policy to close a recessionary gap,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The table above gives a nation's government outlays and tax revenues for 2008 through to 2012. -Based on the table above, during which years did the country have a budget deficit?

Correct AnswerverifiedShow Answer

The table above gives a nation's government outlays and tax revenues for 2008 through to 2012. -Based on the table above, during which years did the country have a budget surplus?

Correct AnswerverifiedShow Answer

A credit rating provides information on an investor's level of default risk. The highest rating is

Correct AnswerverifiedShow Answer

Automatic changes in tax revenues and expenses that occur as a result of fluctuations in real GDP are referred to as automatic

Correct AnswerverifiedShow Answer

-When the government's expenses exceed its revenues, the government debt

Correct AnswerverifiedShow Answer

The largest source of Commonwealth government revenue in the 2017/18 budget was

Correct AnswerverifiedShow Answer

The figure above shows a labour market with an income tax. -The tax wedge in the figure above is equal to ________ per hour, which creates an after-tax real wage rate of ________ per hour and employment of ________ billion hours per year.

Correct AnswerverifiedShow Answer

If a tax cut increases aggregate demand more than aggregate supply, real GDP ________ and the price level ________.

Correct AnswerverifiedShow Answer

-The government debt is the amount

Correct AnswerverifiedShow Answer

If the Commonwealth government cuts taxes by $10 billion, aggregate demand

Correct AnswerverifiedShow Answer

Which of the following is a limitation of discretionary fiscal policy? i. The legislation time lag ii. Estimating potential GDP iii. The income gap

Correct AnswerverifiedShow Answer

When the government's expenses equal its revenues, then the budget

Correct AnswerverifiedShow Answer

If you take a HECS-HELP student loan and repay after you graduate, you redistribute your income. In particular you consume ________ than your income when you are young and in university and ________ your income after you graduate.

Correct AnswerverifiedShow Answer

Income taxes create a wedge between the wage rate paid by ________ and received by workers and thereby ________ employment and ________ potential GDP.

Correct AnswerverifiedShow Answer

When revenues expenses is negative, then the government has a budget .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

If fiscal stimulus creates a large budget , then in the long run economic growth .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The figure above shows a labour market with an income tax. -The tax wedge in the figure above is equal to per hour, which creates an after-tax real wage rate of per hour and employment of billion hours per year.

Correct Answer
verified

If a tax cut increases aggregate demand more than aggregate supply, real GDP and the price level .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

If you take a HECS-HELP student loan and repay after you graduate, you redistribute your income. In particular you consume than your income when you are young and in university and your income after you graduate.

Correct Answer
verified

Income taxes create a wedge between the wage rate paid by and received by workers and thereby employment and potential GDP.

Correct Answer
verified