ECO/372T Principles of Macroeconomics The Latest Version A+ Study Guide
********************************************** ECO 372 Entire Course Link https://uopcourses.com/category/eco-372/ ********************************************** ECO 372 Week 3 Practice: Public Finance and Aggregate Demand and Supply Quiz Complete the Week 3 Public Finance and Aggregate Demand and Supply Quiz in McGraw-Hill ConnectÂŽ by Day 5. These are randomized questions. Note: You have unlimited attempts available to complete practice assignments. The highest scored attempt will be recorded. These assignments have earlier due dates, so plan accordingly. Grades must be transferred manually to eCampus by your
instructor. Don't worry, this might happen after your due date. Which of the following transactions best represents the government playing the role of provider of a good or service? • The state government imposes a tax on cigarette purchases to discourage smoking. • The local government purchases office furniture for renovations to its Department of Parks and Recreation. • The federal government provides Social Security checks to those citizens who qualify for the payment. • The state government pays for police to patrol the state and federal roadways.
Which of the following transactions best represents the government making a transfer payment to a household or business? • The federal government’s Supplemental Nutritional Assistance Program assists low-income families with purchasing food. • The state government’s Office of Motor Vehicles imposes an annual licensing fee for all in-state vehicles. • The federal government’s Internal Revenue Service hires extra accountants during the tax season to audit tax returns. • The local government’s Department of Parks and Recreation operates a local pool for residents in the summer.
The Social Security tax is regressive because Multiple Choice • as income increases, the Social Security tax rate increases at a decreasing rate. • each individual must pay a set percentage of his or her income in Social Security taxes. • the Social Security tax rate applied does not rise with the salary level. • no Social Security tax is collected for incomes in excess of a "cap" income level.
How is the public debt calculated? Multiple Choice
• By subtracting the government’s total liabilities from its total assets • By summing the annual difference between tax revenues and government spending over the years • By subtracting current government spending from current government tax revenues • By summing the annual government purchases over time
A federal budget deficit exists when federal government Multiple Choice • spending is increasing in a given year. • spending exceeds tax revenues in a given year.
• taxation is decreasing in a given year. • assets are less than liabilities in a given year.
Which of the following is the largest expenditure item of state governments? Multiple Choice • Education • Public welfare • Health and hospitals • Highways
Which of the following is the largest expenditure item of local governments? Multiple Choice • Public safety • Education • Welfare • Highways
Many states in the U.S. acquire significant amounts of funds from the following, except
Multiple Choice • personal income taxes. • state-run lotteries. • property taxes. • grants from the Federal government.
A public debt that is owed to foreigners can be burdensome because Multiple Choice • foreign interest rates are persistently higher than domestic interest rates.
• the payment of interest will conflict with a nation's foreign aid programs. • the payment of interest reduces the volume of goods and services available for domestic uses. • the payment of interest will necessarily have a deflationary effect on prices in the paying nation.
Which of the following is not a significant source of revenue for the U.S. federal government? Multiple Choice • Corporate income taxes • Property taxes
• Payroll taxes • Personal income taxes
Which one of the following is not an excise tax of the federal government? Multiple Choice • Tobacco tax • General sales tax • Alcoholic beverage tax • Gasoline tax
Social Security contributions are part of Multiple Choice • excise taxes. • payroll taxes. • indirect taxes. • reverse taxes.
Public finance is the subdiscipline of economics that studies the various ways in which
Multiple Choice • firms in the financial sector provide services to households and firms. • governments may regulate and promote the stability of the financial sector. • governments raise and expend money. • the general public acquires financing for their purchases.
Which of the following is not a government activity that is involved in public finance? Multiple Choice •
Providing public goods and services such as national defense and education. • Regulating the activities of firms in the financial sector of the economy. • Running
government-owned
enterprises
such
as
hospitals, utilities, and lotteries. • Redistributing income through various taxes and income-transfer payments.
The largest proportion of the U.S. public debt is held by Multiple Choice • the Federal Reserve System. • the U.S. public (individuals, businesses, financial
institutions, and government). • foreign individuals and institutions. • U.S. government agencies.
Which of the following statements about payroll taxes is false? Multiple Choice • They are lump-sum taxes not based on wages/salaries. • They include Medicare taxes. • They provide funds for Social Security. • Both employers and employees pay these taxes.
A budget surplus means that Multiple Choice • a nation’s imports are greater than its exports. • government expenditures are greater than revenues in a given year. • government revenues are greater than expenditures in a given year. • a nation’s exports are greater than its imports.
One
important
reason
why
the
United
States
government is not likely to go bankrupt even with a
large public debt is that it has Multiple Choice • a strong military to protect it from creditors. • the capacity to pay off its outstanding debt with gold. • the ability to decrease interest rates and increase investment spending. • the power to print money to finance the debt.
Which is the most important source of tax revenue for local governments? Multiple Choice •
Property taxes • Personal income taxes • Corporate income taxes • Sales and excise taxes
The two largest sources of tax revenue for the U.S. federal government are Multiple Choice • payroll taxes and excise taxes. • personal income taxes and payroll taxes. • excise taxes and customs duties. • personal income taxes and corporate income taxes.
For each of the following scenarios, determine the effect on aggregate supply. a. There is an unexpected decrease in oil prices. This causes: • a movement along the aggregate supply curve to the right, indicating an increase in the quantity of real GDP supplied. • an increase in aggregate supply, shifting the aggregate supply curve to the right. • a movement along the aggregate supply curve to the left, indicating a decrease in the quantity of real GDP supplied. • a decrease in aggregate supply, shifting the aggregate
supply curve to the left. b. The government increases the amount that all producers are required to contribute to health insurance coverage. This causes: • a movement along the aggregate supply curve to the left, indicating a decrease in the quantity of real GDP supplied. • a decrease in aggregate supply, shifting the aggregate supply curve to the left. • an increase in aggregate supply, shifting the aggregate supply curve to the right. • a movement along the aggregate supply curve to the right, indicating an increase in the quantity of real GDP supplied.
For each of the following scenarios, determine whether the situation described can be attributed to the realbalances effect, the interest-rate effect, or the foreignpurchases effect. a. As a result of an increase in the price level, the cost of borrowing increases, which causes people to buy fewer cars. • Real-balances effect • Interest-rate effect • Foreign-purchases effect b. When the price level decreases, restaurants become busier as more people purchase restaurant meals. • Foreign-purchases effect • Interest-rate effect • Real-balances effect
Aggregate demand is best described as the relationship between the: • quantity demanded in a market and the market price. • quantity demanded of a good or service and the price of the good or service. • quantity demanded and the price. • quantity of real GDP demanded in the economy and the price level.
Use the graph of Remi's economy to complete the following statements.
a. Point B is referred to as a trough . b. The movement from point A to point E is called a business cycle . c. Point D is referred to as a peak . d. The movement from point B to point D is called an expansion .
Determine the effect on aggregate demand for each of the scenarios described below. a. All European countries experience an economic expansion, raising incomes in each of the European countries. This causes: • a decrease in aggregate demand, shifting the aggregate
demand curve to the left. • a movement along the aggregate demand curve to the left, indicating a decrease in the quantity of real GDP demanded. • an increase in aggregate demand, shifting the aggregate demand curve to the right. • a movement along the aggregate demand curve to the right, indicating an increase in the quantity of real GDP demanded. b. The government decides to decrease the amount it spends on the military. This causes: • a movement along the aggregate demand curve to the left, indicating a decrease in the quantity of real GDP demanded. • an increase in aggregate demand, shifting the aggregate demand curve to the right. •
a decrease in aggregate demand, shifting the aggregate demand curve to the left. • a movement along the aggregate demand curve to the right, indicating an increase in the quantity of real GDP demanded.
Complete the following statements: a. In the short run, when the price level increases, the quantity of real GDP supplied will increase and the aggregate supply curve will not shift . b. In the short run, some input prices are said to be sticky. This means that: • some firms will not be able to change the prices they charge.
• some input prices will remain constant even as the price level changes. • all prices will remain constant in the economy.
Which of the following events would most likely reduce aggregate demand? Multiple Choice • A reduction in business and personal tax rates. • A reduction in the amount of existing capital stock. • An increase in real interest rates. • An increase in expected returns on investment.
Which of the following factors does not explain the inverse relationship between the price level and the total demand for output? Multiple Choice • A foreign-purchases effect • A real-balances effect • A substitution effect • An interest-rate effect
The long-run aggregate supply curve is _____.
Multiple Choice • upward-sloping and becomes steeper at output levels above the full-employment output • vertical • upward-sloping and becomes flatter at output levels above the full-employment output • horizontal
The aggregate demand curve or schedule shows the relationship between the total demand for output and the _____. Multiple Choice •
price level • income level • interest rate • real GDP
The short-run version of aggregate supply assumes that product prices are _____. Multiple Choice • fixed while resource prices are flexible • flexible while resource prices are fixed • both input and product prices are flexible •
both input and product prices are fixed
Use the following graph to answer the next question.
A shift from AD2 shifts to AD1 would be consistent with what economic event in U.S. history? Multiple Choice • demand-pull inflation in the late 1960s • cost-push inflation in the mid-1970s • Great Recession of 2007-2009 • World War II in the 1940s
Use the following graph to answer the next question. If current output is Q1 and full-employment output is Q3, then in the long run the short aggregate supply schedule is _____. Multiple Choice • AD • AS3 • AS1 • AS2
The labels for the axes of an aggregate supply curve
should be _____. Multiple Choice • real domestic output for the horizontal axis and price level for the vertical axis • aggregate demand for the vertical axis and real national output for the horizontal axis • real domestic output for the vertical axis and price level for the horizontal axis • real employment for the vertical axis and price level for the horizontal axis
Use the following graph to answer the next question.
If AD1 shifts to AD2, then the equilibrium output increases from _____. Multiple Choice • Q1 to Q3 while the price level falls from P2 to P1 • Q1 to Q2 while the price level falls from P2 to P1 • Q1 to Q2 while the price level rises from P1 to P2 • Q1 to Q3 while the price level rises from P1 to P2
The labels for the axes of the aggregate demand graph should be _____. Multiple Choice • real domestic output on the horizontal axis and the price
level on the vertical axis • real domestic output on the vertical axis and the price level on the horizontal axis • quantity of a product on the vertical axis and the price of a product on the horizontal axis • price of a product on the vertical axis and quantity of a product on the horizontal axis
Use the following graph to answer the next question.
Which of the following factors does NOT explain a movement along the AD curve? Multiple Choice
• The foreign purchases effect • The real-balances effect • The interest-rate effect • The expenditure multiplier effect
An aggregate supply curve represents the relationship between the _____. Multiple Choice • price level and the buying of real domestic output • real domestic output bought and the real domestic output sold •
price level and the production of real domestic output • price level that producers are willing to accept and the price level buyers are willing to pay
The upward slope of the short-run aggregate supply curve is based on the assumption that _____. Multiple Choice • wages and other resource prices do respond to price level changes • prices of inputs are flexible while prices of outputs are fixed • wages and other resource prices do not respond to price level changes •
prices of output do not respond to price level changes
A decrease in expected returns on investment will most likely shift the AD curve to the _____. Multiple Choice • left because C will decrease • left because Ig will decrease • right because C will increase • right because Ig will increase
Use the following graph to answer the next question.
The short-run equilibrium for this economy is at _____. Multiple Choice • point e • point g • none of these points • point f
Use the following graph to answer the next question. If aggregate supply shifts from AS1 to AS2, then the price level will _____.
Multiple Choice • increase and real domestic output will decrease • increase and real domestic output will increase • decrease and real domestic output will decrease • decrease and real domestic output will increase
Use the following graph, which shows an aggregate demand curve, to answer the next question,
If the price level decreases from 200 to 100, the real output demanded will _____.
Multiple Choice • increase by $200 billion • increase by $800 billion • decrease by $600 billion • decrease by $200 billion
Which of the following effects best explains the downward slope of the aggregate demand curve? Multiple Choice • A multiplier effect • An expectations effect
• A substitution effect • An interest-rate effect
Which would most likely shift the aggregate supply curve? A change in the prices of _____. Multiple Choice • foreign products • financial assets • domestic products • resources
In the aggregate demand-aggregate supply model, the economy’s price level is assumed to be _____. Multiple Choice • variable, just like in the aggregate expenditures model • constant, unlike in the aggregate expenditures model • variable, unlike in the aggregate expenditures model • constant, just like in the aggregate expenditures model
An increase in personal income taxes will cause a(n) _____.
Multiple Choice • decrease (or shift left) in aggregate demand • decrease in the quantity of real output demanded (or movement up along AD) • increase (or shift right) in aggregate demand • increase in the quantity of real output demanded (or movement down along AD)
The economy's long-run AS curve assumes that wages and other resource prices _____. Multiple Choice • are relatively inflexible both upward and downward •
rise and fall more rapidly than the price level • are flexible upward but inflexible downward • eventually rise and fall to match upward or downward changes in the price level
The long-run aggregate supply analysis assumes that _____. Multiple Choice • both input and product prices are variable • both input and product prices are fixed • input prices are fixed while product prices are variable • input prices are variable while product prices are fixed
Which of the following would not shift the aggregate demand curve? Multiple Choice • Income tax rates • Foreign-exchange rates • Real interest rates • Productivity rates