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b. cost-push inflation.
c. an expansion of real GDP and an automatic increase in tax revenues.
d. a contractionary fiscal policy.
Answer the next question(s) using the following budget information for a hypothe
tical economy. Assume that all budget surpluses are use to pay down the public d
ebt.
Picture
Refer to the above data. If year 1 is the first year of this nation's existence
and year 6 is the present year, this nation's public debt is:
Select one:
a. $275 billion.
b. $100 billion.
c. $3540 billion.
d. $230 billion.
Answer the next question(s) on the basis of the following before-tax consumption
schedule for a closed economy:
Picture
Refer to the above data. If a lump-sum tax (the same tax amount at each level of
GDP) of $40 is imposed in this economy, we can conclude that the tax:
Select one:
a. enhances the economy's built-in stability.
b. reduces the economy's built-in stability.
c. neither increases nor decreases built-in stability.
d. increases the MPC and therefore increases the size of the multiplier.
Answer the next question(s) on the basis of the following sequence of events inv
olving fiscal policy:
(1) The composite index of leading indicators turns downward for three consecuti
ve months; (2) Economists reach agreement that the economy is moving into a rece
ssion; (3) A tax cut is proposed in Congress; (4) The tax cut is passed by Congr
ess and signed by the President; (5) Consumption spending begins to rise, aggreg
ate demand increases, and the economy begins to recover.
Refer to the above information. The administrative lag of fiscal policy is refle
cted in events:
Select one:
a. 1 and 2.
b. 2 and 3.
c. 3 and 4.
d. 4 and 5.
The M2 money supply may be larger or smaller than the MZM money supply depending
on the size of small time deposit balances and Money Market Mutual Fund balance
s held by businesses.
Select one:
True
False