Which of the following is an example of an automatic fiscal policy action?
A) increased unemployment payments resulting from higher unemployment
B) an increase in spending on defense goods resulting from increased world tensions
C) an increase in the tax rate resulting from a desire to shrink the budget deficit
D) a decrease in the tax rate resulting from an effort to increase aggregate demand to combat a recession
E) None of the above answers is correct.
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The FOMC is the
A) report the Fed gives to Congress twice a year.
B) group within the Fed that makes monetary policy.
C) report that summarizes the economy across Fed districts.
D) name of the meeting the Fed has with Congress twice a year.
E) interest rate the Fed most directly influences.
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Suppose an economy has no income taxes or imports. If the MPC is 0.75, what does the multiplier equal?
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Based on the data in the table above, what does GDP equal?
A) $10,200 billion
B) $10,400 billion
C) $10,000 billion
D) $9,800 billion
E) $8,900 billion
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If a private wage contract is agreed upon with a cost of living adjustment such that wage hikes are equal to increases in the CPI,
A) the employer benefits because wages will rise less than the change in actual prices.
B) workers exactly keep pace with changes in the cost of living.
C) workers benefit because the CPI increases more rapidly than does the cost of living.
D) the CPI bias means that workers benefit if the price level rises and the employer benefits if the price level falls.
E) the CPI bias means that workers benefit if the price level falls and the employer benefits if the price level rises.
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If the Fed carries out an open market operation and buys U.S. government securities, the federal funds rate ________ and the quantity of reserves ________.
A) falls; increases
B) rises; increases
C) rises; decreases
D) falls; decreases
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When the government's outlays exceed its tax revenue, the national debt
A) shrinks thanks to the budget surplus.
B) grows to finance the budget deficit.
C) shrinks thanks to the budget deficit.
D) grows to finance the budget surplus.
E) does not change because it has nothing to do with government outlays and tax revenue.
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When tax revenue exceed the government's outlays, the budget
A) has a deficit and the national debt is increasing.
B) is balanced and the national debt is decreasing.
C) has a surplus and the national debt is decreasing.
D) has a surplus and the national debt is increasing.
E) None of the above because by law tax revenue cannot exceed the government's expenditures.
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When tax revenues equal government outlays, the situation is referred to as
A) a balanced budget.
B) an equivalent budget.
C) an equal budget.
D) an equilibrium budget.
E) a legal budget.
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In the market for bank reserves, if the federal funds rate target is higher than the federal funds rate, the Fed will take action to ________ reserves.
A) decrease the demand for
B) increase the supply of
C) decrease the supply of
D) increase the demand for
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