Flashcards and Answers – Econ – Definitions
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Every hour, the federal government spends about
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$250 million
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The federal budget is put together
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by Congress and the White House.
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An example of expansionary fiscal policy would be
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cutting taxes.
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All of the following are reasons why it is difficult to put balanced fiscal policy into practice EXCEPT
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the need for discretionary spending.
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All of the following people are well-known classical economists EXCEPT
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Arthur Laffer
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In contrast with classical economics, Keynesian economics
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takes a broader view of the economy.
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When revenues exceed expenditures,
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there is a budget surplus.
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when you buy a United States Savings Bond, you
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loan money to the government.
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Keynesian economics failed to deal successfully with
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high inflation during the 1970s.
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The national debt rose during Ronald Reagan's term as President for all of the following reasons EXCEPT
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the costs of running a war.
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The Office of Management and Budget
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is responsible for deciding how much money each government agency receives in the budget.
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An example of contractionary fiscal policy would be
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decreasing government spending.
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The purpose of expansionary fiscal policy is to
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increase output.
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All of the following are reasons why it is difficult to implement balanced fiscal policy EXCEPT
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the need for discretionary spending.
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All of the following are characteristics of classical economics EXCEPT
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a significant role for government in the running of the economy.
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An example of an automatic stabilizer is
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taxes.
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Supporters of supply-side economics believe that
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taxes have a strong negative influence on economic output.
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All of the following are problems associated with high national debt EXCEPT that it
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makes investing in treasury bonds, notes, and bills very risky.
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An accurate statement about achieving a balanced budget would be that
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most states require a balanced budget for state spending.
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The federal government's Fiscal Year 2007 begins on
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October 1, 2006.
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Congress has just passed several bills outlining the federal budget. What is the next step in the budget process?
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The President signs the budget into law or vetoes it and sends it back to Congress.
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What leads directly to the crowding-out-effect?
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a big federal budget deficit
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Which of these statements is a fundamental part of Keynesian economics?
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The government can use deficit spending to increase aggregate demand and pull the economy out of recession.
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What is one example of an automatic stabilizer?
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food stamps
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Which of these statements is a fundamental part of supply-side economics?
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The government should reduce taxes to promote economic growth by increasing aggregate supply.
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The Laffer curve predicts the effects of changes in the tax rate on
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tax revenues.
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Which of these is a contractionary fiscal policy?
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The President and Congress pass a new two-cent-per-gallon gasoline tax.
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The President has vetoed several appropriations bills. What is the next step in the budget process?
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Congress can vote to override the vetoes or pass new appropriations bills that the President is likely to sign
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What will lead DIRECTLY to a government "shut down"?
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The President vetoes Congress's appropriations bills.
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Why makes increased government spending an effective tool for increasing demand?
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the multiplier effect
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How did the Great Depression relate to the school of classical economics?
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The Great Depression appeared to disprove the classical theory that demand and supply could return to a healthy equilibrium through market forces alone.
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Which statement describes the federal government's fiscal policies in the 1980s?
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Income tax rates were reduced, but spending increased.
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Which of these Presidents increased top marginal income tax rates during his term in office?
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Franklin D. Roosevelt
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Robin buys a newly-issues Treasury bond, Treasury note, and Treasury bill. Which will mature and be repaid by the government LAST?
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Treasury bond
