Questions:
Question 1. The White House sees a recession on the horizon, but Congress is preoccupied with other issues and is slow to act. This delay is an example of a recognition lag.
a time lag.
an implementation lag.
an impact lag.
a communication gap.
Question 2. If an economy has high unemployment, slow growth, and low inflation rates, an appropriate fiscal policy consists of
lower taxes, higher government spending.
higher taxes, higher government spending.
higher taxes, lower government spending.
lower taxes, lower government spending.
higher taxes, no change in government spending.
Question 3. The largest source of income for state governments is
sales taxes.
property taxes.
borrowing.
income taxes.
aid from the federal government.
Question 4. The time between the legislation of fiscal policy and its effect on output and employment is called
the recognition lag.
the implementation lag.
the impact lag.
the deflationary lag.
the fiscal lag.
Question 5.The lags for fiscal policy
are short, except for the recognition lag.
can be long and variable, thus making fiscal policy difficult to implement.
are the combined effects of the recognition and implementation lags.
increase the stability of the economy.
are only considered for changes in government spending.
Question 6.The Bureau of Economic Analysis has been hit by the flu; consequently, it has been slow in getting out data on economic performance. A recession is developing, but nobody knows it yet. This delay is an example of
a recognition lag.
a time lag.
an implementation lag.
an impact lag.
a jet lag.
Question 7.A structural deficit
is the part of the deficit due to being in recession.
disappears when the economy reaches full-employment.
is the part of the deficit that would persist even at full-employment output.
is the result of congressional changes in the budget sent to Congress by the President.
is equal to the deficit other than the part accounted for by the surplus or deficit in the Social Security trust funds.
Question 8. Keynes advocated expansionary fiscal policy when an economy was
at full-employment output.
experiencing a recession.
experiencing inflation.
at potential output.
in wartime.
Question 9.The measured deficit would be larger if
it were calculated as the real deficit.
it were measured at full employment when the economy is actually below full employment.
Social Security revenues and expenditures were excluded.
revenues and expenditures of state and local governments were taken into account.
the trade deficit were taken into account.
Question 10. In the classical model, the supply of loanable funds is
provided through saving by households.
positively related to the interest rate.
perfectly inelastic.
provided through saving by households and positively related to the interest rate.