Question 2 (1 point) Which one of the following is a reason the crowding-out eff

Question

Question 2 (1 point)

Which one of the following is a reason the crowding-out effect could be mitigated?

Question 2 options:

a)

an increase in consumer consumption

b)

a decrease in tax revenues

c)

an increase in the saving rate

d)

deficit spending used for public investment

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Question 3 (1 point)

If the ultimate goal of fiscal policy aimed at aggregate supply is achieved, what happens to the aggregate price level and aggregate output?

Question 3 options:

a)

aggregate price level increases; aggregate output decreases

b)

aggregate price level decreases; aggregate output increases

c)

aggregate price level increases; aggregate output increases

d)

aggregate price level decreases; aggregate output decreases

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Question 4 (1 point)

If a government collects $550 billion in taxes and spends $700 billion, it would have a:

Question 4 options:

a)

surplus of $1,250 billion.

b)

deficit of $150 billion.

c)

deficit of $1,250 billion.

d)

surplus of $150 billion.

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Question 5 (1 point)

What did Arthur Laffer suggest President Reagan do in the 1980s?

Question 5 options:

a)

decrease income taxes

b)

increase corporate taxes

c)

increase welfare benefits

d)

increase income taxes

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Question 6 (1 point)

The fact that it takes a very long time for Congress to debate and enact fiscal policies such as a tax cut for low-income households is an example of a(n):

Question 6 options:

a)

decision lag.

b)

implementation lag.

c)

recognition lag.

d)

information lag.

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Question 7 (1 point)

The most important measure in determining whether a country's national debt is a significant problem is:

Question 7 options:

a)

the size of the debt in nominal terms.

b)

the proportion of the national debt that is held by government agencies.

c)

interest paid on the national debt as a portion of GDP.

d)

the interest rate paid on the debt.

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Question 8 (1 point)

If the national debt is $55 million and this year's deficit is $5 million, what would the new national debt be?

Question 8 options:

a)

$50 million

b)

$11 million

c)

$60 million

d)

$275 million

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Question 9 (1 point)

All of the following programs are considered mandatory spending EXCEPT:

Question 9 options:

a)

Social Security.

b)

interest on national debt.

c)

national defense.

d)

Medicare.

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Question 10 (1 point)

Suppose the government collected $3.2 trillion in tax revenues and spent $3.8 trillion, and discretionary spending was $1.5 trillion. For the government to fully balance the budget this year, how much discretionary spending needs to be cut?

Question 10 options:

a)

20%

b)

40%

c)

30%

d)

10%

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Question 11 (1 point)

Evidence has suggested that borrowing is _____ than taxation by politicians to finance fiscal policy spending, which has led to a(n) _____ of the federal government over the last few decades.

Question 11 options:

a)

more favored; contraction

b)

less favored; contraction

c)

more favored; expansion

d)

less favored; expansion

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Question 12 (1 point)

Reducing government spending, reducing transfer payments, or raising taxes describes which policy?

Question 12 options:

a)

contractionary fiscal policy

b)

expansionary fiscal policy

c)

monetary policy

Explanation / Answer

Ans)

2.
c)
an increase in the saving rate
An increase in the savings rate will provide more loans in the market as a result of which their would be more supply of loanable funds, thus mitigating the effect of crowding out.
3.
b)
aggregate price level decreases; aggregate output increases.
4.
b)
deficit of $150 billion.
Since the revenue is less than the spending their is a deficit (550-700=-150).
5.
a)
decrease income taxes
Arthur Laffer suggested that decreases in the tax rates might actually increase the amount of taxes collected.

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