Multiple Choice Questions

The Social Security trust fund
  • in the time it takes to identify the situation, enact a policy, and allow it to work, economic circumstances may have changed.
  • includes assets held by these programs to help pay for future projected tax revenue shortfalls.
  • reduction in investment spending caused by the increase in interest rates, arising from an increase in government spending.
  • most of the current revenues from the Social Security tax are paid to current Social Security retirees.
Why is the debt as a percentage of GDP more relevant than the total debt?
  • owed by the federal government to all security holdersa portion of U.S. debt.
  • most of the current revenues from the Social Security tax are paid to current Social Security retirees.
  • Debt as a percentage of GDP measures the economy's ability to manage debt correct.
  • in the time it takes to identify the situation, enact a policy, and allow it to work, economic circumstances may have changed.
As a percentage of GDP, the total U.S. public debt is the highest such debt among the world's advanced nations
  • True
  • False
Expectations of a near-term policy reversal weaken fiscal policy because
  • an increase in government spending.
  • increasing government spending, decreasing taxes, or both.
  • a cut in taxes.
  • consumers may hesitate to increase their spending because they believe that tax rates will rise again.
Built-in, or automatic, stabilizers work by changing
  • tax revenue and government payouts correct so that GDP changes are reduced.
  • owed by the federal government to all security holdersa portion of U.S. debt.
  • politicians are more interested in reelection than in stabilizing the economy.
  • government borrowing to finance the debt increases demand for funds and competes with private borrowing.
For a person who wants to preserve the size of government, the fiscal options for ending a recession include
  • a cut in taxes.
  • increasing government spending, decreasing taxes, or both.
  • an increase in government spending.
  • consumers may hesitate to increase their spending because they believe that tax rates will rise again.
As a percentage of GDP, the total U.S. public debt held by the public was larger in 2010 than it was in 1990.
  • True
  • False
A political business cycle happens because
  • includes assets held by these programs to help pay for future projected tax revenue shortfalls.
  • tax revenue and government payouts correct so that GDP changes are reduced.
  • politicians are more interested in reelection than in stabilizing the economy.
  • Debt as a percentage of GDP measures the economy's ability to manage debt correct.
Budget deficits in 2002 were due to
  • politicians are more interested in reelection than in stabilizing the economy.
  • the recession and tax cuts
  • fiscal stimulus after the financial collapse
  • tax revenue and government payouts correct so that GDP changes are reduced.
The government's fiscal policy options for moving the economy out of a recession include
  • a cut in taxes.
  • increasing government spending, decreasing taxes, or both.
  • consumers may hesitate to increase their spending because they believe that tax rates will rise again.
  • an increase in government spending.
An internally held public debt is like a debt of the left hand owed to the right hand.
  • True
  • False
Total U.S. debt is the total amount of money debt held by the public is
  • tax revenue and government payouts correct so that GDP changes are reduced.
  • Debt as a percentage of GDP measures the economy's ability to manage debt correct.
  • most of the current revenues from the Social Security tax are paid to current Social Security retirees.
  • owed by the federal government to all security holdersa portion of U.S. debt.
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Multiple Choice Questions
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