Ch 15 Multiple Choice – Flashcards
Unlock all answers in this set
Unlock answersquestion
An accurate statement about achieving a balanced budget would be that
answer
most states require a balanced budget for state spending
question
What is one important distinction between classical economics and Keynesian economics?
answer
Classical economics teaches that free markets regulate themselves, and Keynesian economics teaches that government action affects the economy
question
All of the following are characteristics of classical economics EXCEPT
answer
a significant role for government in the running of the economy
question
The author of The General Theory of Employment, Interest, and Money was
answer
John Keynes
question
The purpose of expansionary fiscal policy is to
answer
increase output
question
Fiscal policy is carried out primarily by
answer
the Federal government
question
The crowding-out effect of expansionary fiscal policy suggests that
answer
government spending is increasing at the expense of private investment
question
All of the following are reasons why it is difficult to implement balanced fiscal policy except
answer
the need for discretionary spending
question
Keynesian economics failed to deal successfully with
answer
high inflation during the 1970s
question
In contrast with classical economics, Keynesian economics,
answer
takes a broader view of the economy
question
The federal budget is put together
answer
by Congress and the White House
question
How does the "crowding- out effect" influence businesses?
answer
The federal government makes it harder for private businesses to borrow
question
An example of expansionary fiscal policy would be
answer
cutting taxes
question
How did economic events during WWII demonstrate the principles of Keynesian economics
answer
As government spending increased, America came out of the Great Depression and moved toward higher productivity
question
A major advantage of the built-in or automatic stabilizers is that they
answer
require no legislative action by Congress to be made effective
question
All of the following are reasons why it is diffucult to put balanced fiscal policy into practice except
answer
the need for discretionary spending
question
Supporters of supply-side economics believe that
answer
taxes have a strong negative influence on economic output
question
When revenues exceed expenditures
answer
there is a budget surplus
question
Every hour, the federal government spends about
answer
$200 million
question
All of the following people are well-known classical economists expect
answer
Arthur Laffer
question
The political business cycle refers to the possibility that
answer
politicians will manipulate the economy to enhance their chances of being reelected
question
The national debt rose during Ronald Reagan's term as President for all of the following reasons except
answer
the cost of running a war
question
When you buy a US Savings Bond, you
answer
loan money to the government
question
An example of contractionary fiscal policy would be
answer
decreasing government spending
question
An example of an automatic stabilizer
answer
taxes
question
All of the following are problems associated with high national debt except that it
answer
makes investing in treasury bonds, notes, and bills very risky
question
The national debt of the US is in excess of
answer
18.1 trillion dollars
question
The Office of Management and Budget
answer
is responsible for deciding how much money each government agency receives in the budget
