Originally Posted by
econ 
hey guys can you please tell me the answers to these. ive done em just wanna chek the answers
1.
In order to maintain a balanced budget, Congress has decided to cut taxes and government spending both by $25 billion. What will happen to GDP?
A) It will increase.
B) It's impossible to know without the multiplier.
C) It will remain the same.
D) It will decrease.
2.
In the middle of a severe recession, Congress passes an increase in the level of unemployment benefits. This would be considered by economists as a
A) variable tax.
B) negative tax.
C) positive tax.
D) form of government purchases.
3.
If the U.S. government decides to eliminate a budget surplus by reducing taxes, the most likely effect would be
A) falling prices.
B) a reduction in the trade deficit.
C) an increase in unemployment.
D) upward pressure on prices.
4.
If the economy is in a recessionary gap, and the government attempts to balance the budget by reducing G and/or increasing T, the effect will be to
A) worsen and prolong the recession.
B) increase the level of real GDP.
C) end the recession sooner.
D) counteract the recession.
5.
If the economy is in an inflationary gap, and the government attempts to balance the budget by reducing G and/or raising T, the effect will be to
A) reduce the trade deficit.
B) counteract inflation.
C) decrease unemployment.
D) continue inflationary pressures.
6.
If in fiscal year 2001, the federal government receives $1,990 billion in revenues and spends $1,875 billion for goods and services, the national debt will
A) increase by $1,990 billion.
B) decrease by $1,875 billion.
C) increase by $115 billion.
D) decrease by $115 billion.
7.
What happens typically to a budget deficit during a recession?
A) It decreases automatically.
B) It increases because of tax changes.
C) It decreases because of spending decreases.
D) It increases automatically.
8.
If the national debt is owed to foreigners,
A) economic growth will necessarily be higher than if the debt were owed to domestic citizens.
B) future interest payments on the debt are not a burden to the nation.
C) the debt constitutes a burden to domestic citizens.
D) paying off the debt will involve a transfer of resources within the country.
9.
Assume that the MPC is .75, and investment spending rises by $25 billion. How much will real GDP change?
A) $25 billion
B) $175 billion
C) $100 billion
D) $75 billion
10.
As a result of the war in Afghanistan, the population of Afghanistan as well as their capital stock was reduced. This can be illustrated by aggregate supply curve
A) becoming flatter.
B) shifting rightward.
C) becoming more elastic.
D) shifting leftward.
11.
If aggregate quantity demanded exceeds aggregate quantity supplied, we can expect an unplanned
A) accumulation of inventories, causing firms to raise prices.
B) depletion of inventories, causing firms to lower prices.
C) accumulation of inventories, causing firms to lower prices.
D) depletion of inventories, causing firms to raise prices.
12.
Assume an economy with an upward-sloping aggregate supply curve and an MPC of .80. An increase in investment spending of $50 billion will increase total income by
A) more than $50 billion but less than $250 billion.
B) $40 billion.
C) $200 billion.
D) more than $200 billion.
13.
A recession can be expected to reduce inflation in the economy if the recession is caused by a(n)
A) increase in aggregate demand.
B) decrease in aggregate demand.
C) decrease in aggregate supply.
D) increase in aggregate supply.
14.
How are aggregate supply and stagflation related?
A) Stagflation only follows inflation, with no relation to aggregate supply.
B) An adverse supply shift usually causes stagflation.
C) There is no relationship between the two.
D) Stagflation usually causes an adverse shift in aggregate supply.
15.
Assume that the MPC is .9 and investment falls by $30 billion. What is the change in real GDP?
A) -$300 billion
B) -$270 billion
C) -$39 billion
D) -$93 billion
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