Filters
Question type
Study Flashcards

Those who desire that policymakers stabilize the economy would advocate which of the following when aggregate demand is insufficient to ensure full employment?


A) decreasing the money supply
B) decreasing taxes
C) decreasing government expenditures
D) increasing taxes

E) A) and B)
F) A) and C)

Correct Answer

verifed

verified

Suppose a country has had a high and relatively stable inflation rate for a long time. How might this affect the costs and benefits of inflation reduction?

Correct Answer

verifed

verified

If inflation is usually about what peopl...

View Answer

In which of the following situations is a program to reduce inflation likely to have the highest costs?


A) if the sacrifice ratio high and the reduction is unexpected
B) if the sacrifice ratio high and the reduction is expected
C) if the sacrifice ratio low and the reduction is unexpected
D) if the sacrifice ratio low and the reduction is expected

E) A) and D)
F) B) and C)

Correct Answer

verifed

verified

Suppose that a central bank is required to follow a monetary policy rule to stabilize prices. If the economy starts at long-run equilibrium and then aggregate demand shifts right, what should the central bank do, and what will happen to output?


A) The central bank should increase the money supply, which causes output to move closer to its long-run equilibrium.
B) The central bank should increase the money supply, which causes output to move farther from its long-run equilibrium.
C) The central bank should decrease the money supply, which causes output to move closer to its long-run equilibrium.
D) The central bank should decrease the money supply, which causes output to move farther from its long-run equilibrium.

E) B) and D)
F) A) and C)

Correct Answer

verifed

verified

Suppose that the central bank must follow a rule that requires it to increase the money supply when the price level falls and decrease the money supply when the price level rises. If the economy starts from long-run equilibrium and aggregate supply shifts left, what must the central bank do, and what will happen to output?


A) The central bank must decrease the money supply, which will move output back towards its long-run level.
B) The central bank must decrease the money supply, which will move output farther from its long-run level.
C) The central bank must increase the money supply, which will move output back towards its long-run level.
D) The central bank must increase the money supply, which will move output farther from its long-run level.

E) A) and D)
F) A) and C)

Correct Answer

verifed

verified

Why does Canadian public policy discourage saving?


A) because, other things the same, taxes increase the return from savings
B) because means-tested programs such as Old Age Security provide greater benefits to those who saved
C) because some forms of capital income are not taxed
D) because capital gains are taxed heavily

E) None of the above
F) B) and C)

Correct Answer

verifed

verified

Suppose the budget deficit is rising 4 percent per year and nominal GDP is rising 7 percent per year. How are the debt and the burden on future generations created by these continuing deficits?


A) The debt is sustainable, but the future burden on your children cannot be offset.
B) The debt is not sustainable, and the future burden on your children cannot be offset.
C) The debt is sustainable, and the future burden on your children can be offset if you save for them.
D) The debt is not sustainable, but the future burden on your children can be offset if you save for them.

E) B) and C)
F) A) and D)

Correct Answer

verifed

verified

When the government has a deficit, it necessarily imposes a burden on future generations of taxpayers.

A) True
B) False

Correct Answer

verifed

verified

The following charts are published by the Government of Canada in its Annual Financial Report 2008-2009. Based on the charts, answer the following questions. The following charts are published by the Government of Canada in its Annual Financial Report 2008-2009. Based on the charts, answer the following questions. -How does Canada compare to other countries as far as public debt is concerned? -How does Canada compare to other countries as far as public debt is concerned?

Correct Answer

verifed

verified

Canada was...

View Answer

Suppose the economy goes into recession. Which of the following lists contains things policymakers could do to try to end the recession?


A) increase the money supply, increase taxes, and increase government spending
B) increase the money supply, increase taxes, and decrease government spending
C) increase the money supply, decrease taxes, and increase government spending
D) decrease the money supply, increase taxes, and decrease government spending

E) A) and B)
F) A) and C)

Correct Answer

verifed

verified

Tax laws do not give preferential treatment to some kinds of retirement saving.

A) True
B) False

Correct Answer

verifed

verified

Which of the following would transfer wealth from the young to the old?


A) Taxes are raised to provide better education.
B) Taxes are raised to improve government infrastructure such as roads and bridges.
C) Taxes are raised to provide more generous pensions.
D) Taxes are raised to pay back part of the government debt.

E) A) and B)
F) B) and C)

Correct Answer

verifed

verified

Suppose that in fiscal year 2010 the government ran a deficit of about $160 billion. The debt at the start of this period was about $6126 billion. Which of the following combinations of inflation and real GDP would have allowed the government to run a deficit this large without raising the debt-to-income ratio?


A) inflation = 2 percent; real GDP growth = 0 percent
B) inflation = 3 percent; real GDP growth = -1 percent
C) inflation = 2 percent; real GDP growth = 1 percent
D) inflation = 1.5 percent; real GDP growth = 1 percent

E) None of the above
F) All of the above

Correct Answer

verifed

verified

Explain why a government deficit is likely to lead to lower living standards in the future.

Correct Answer

verifed

verified

A government deficit means that the gove...

View Answer

Which of the following is a significant cost of inflation?


A) printing more money
B) lower nominal interest rates
C) relative price variability
D) higher unemployment

E) B) and C)
F) All of the above

Correct Answer

verifed

verified

Which kind of lag is important for monetary policy? Which kind of lag is important for fiscal policy?

Correct Answer

verifed

verified

Both are prone to lags, but the lags are...

View Answer

Economists predict the business cycle well enough that stabilization policy is likely to work despite lags in the effects of policy.

A) True
B) False

Correct Answer

verifed

verified

Suppose that the government goes into deficit in order to help local school districts build better schools. Does this burden future generations?

Correct Answer

verifed

verified

The benefits of the project ac...

View Answer

Would economists say that, in general, Canadian tax system encourages saving?


A) Yes, because the taxes on capital gain are low.
B) No, because income taxes are generally high.
C) Yes, because some forms of capital gain are not taxed.
D) No, because the taxes on capital gain are high.

E) All of the above
F) A) and B)

Correct Answer

verifed

verified

During the financial year 2008-2009, the government of Canada ran a deficit of $5.8 billion, bringing the government's public debt to $463.7 billion. (The debt-to-GDP ratio was 29 percent, still down from the preceding year. Source: Government of Canada, Annual Financial report, http://www.fin.gc.ca/afr-rfa/2009/afr-rfa09-eng.pdf). Assuming an inflation rate of 2 percent, what real GDP growth rate would have allowed the government to run a deficit this large without raising the debt-to-income ratio?

Correct Answer

verifed

verified

The percentage change in the Debt to (no...

View Answer

Showing 21 - 40 of 118

Related Exams

Exam 1

Ten Principles of Economics

205 Questions

Exam 2

Thinking Like an Economist

230 Questions

Exam 3

Interdependence and the Gains From Trade

200 Questions

Exam 4

The Market Forces of Supply and Demand

303 Questions

Exam 5

Measuring a Nations Income

168 Questions

Exam 6

Measuring the Cost of Living

176 Questions

Exam 7

Production and Growth

185 Questions

Exam 8

Saving, Investment, and the Financial System

208 Questions

Exam 9

Unemployment and Its Natural Rate

186 Questions

Exam 10

The Monetary System

196 Questions

Exam 11

Money Growth and Inflation

193 Questions

Exam 12

Open-Economy Macroeconomics: Basic Concepts

215 Questions

Exam 13

A Macroeconomic Theory of the Open Economy

184 Questions

Exam 14

Aggregate Demand and Aggregate Supply

241 Questions

Exam 15

The Influence of Monetary and Fiscal Policy on Aggregate Demand

219 Questions

Exam 16

The Short-Run Tradeoff Between Inflation and Unemployment

203 Questions

Show Answer