Problem 1
Which one of these would be the most accurate statement? (L?6) a) There was a very short fiscal policy decision lag in \(2008 .\) b) There was virtually no fiscal policy impact lag in 2008 . c) In 2008 rebate checks were sent out within weeks after the beginning of the economic slowdown. d) President George W. Bush and the leaders of Congress were very slow to act after recognizing that there was an economic slowdown in early 2008 .
Problem 2
When equilibrium GDP is too small, we have \- (LO1) a) a recessionary gap c) an inflationary gap b) a depression d) none of these
Problem 3
There is an inflationary gap when (LO1) a) equilibrium GDP is equal to full-employment GDP b) equilibrium GDP is smaller than full-employment GDP c) equilibrium GDP is larger than full-employment GDP d) none of these occur
Problem 4
Fiscal policy and monetary policy are (LO1) a) different means used to attain different goals b) different means used to attain the same goals c) the same means to attain the same goals d) the same means to attain different goals
Problem 5
Budget surpluses are most appropriate during (LO5) a) depressions b) recessions c) inflations
Problem 8
When there is a recession, the biggest decline is in (LO3) a) Social Security tax receipts b) personal income tax receipts c) consumer spending d) corporate aftertax profits
Problem 9
The automatic stabilizers (LO3) a) help smooth out the business cycle b) make the business cycle worse c) eliminate the business cycle
Problem 10
Each of the following is an example of discretionary fiscal policy except (LO4) a) public works spending b) making the automatic stabilizers more effective c) changes in tax rates d) the unemployment insurance program
Problem 11
Which of the following is an example of crowding out? (LO7) a) Federal government spending causes changes in state and local government spending. b) Government spending reduces private spending. c) Tax changes perceived as temporary are largely ignored. d) Government spending causes the price level to rise.
Problem 12
Fiscal policy is made by (LO1) a) the president only b) Congress only c) both the president and Congress d) neither the president nor Congress
