Question 1. Question : A structural deficit

02 Jun Question 1. Question : A structural deficit

Question
1. Question : A structural deficit

Student Answer: is the part of the deficit due to being in recession.

disappears when the economy reaches full-employment.

is the part of the deficit that would persist even at full-employment output.
is the result of congressional changes in the budget sent to Congress by the President.
is equal to the deficit other than the part accounted for by the surplus or deficit in the Social Security trust funds.

Question 2. Question : The measure that shows how much of the deficit is due to a downturn in economic activity is

Student Answer: the structural deficit.

the real deficit.

the actual deficit.

the cyclical deficit.

the budget deficit excluding Social Security accounts.

Question 3. Question : According to Marshall’s money demand theory, if there is an increase in the money supply, then the initial (short-run) effect will be

Student Answer: a decrease in aggregate demand.

an increase in aggregate demand.

an increase in aggregate supply.

a decrease in aggregate supply.

an increase in aggregate demand and a decrease in aggregate supply.

Question 4. Question : Income security payments account for about what share of federal government spending in the United States?

Student Answer: one-half

one-third

one-fourth

one-fifth

one-eighth

Question 5. Question : The sales tax burden on households is

Student Answer: progressive.

regressive.

proportional.

neutral.

unrelated to a household’s income.

Question 6. Question : In the classical model, the supply of loanable funds is

Student Answer: provided through saving by households.

positively related to the interest rate.

perfectly inelastic.

provided through saving by households and positively related to the interest rate.

Question 7. Question : Keynes argued that planned saving was

Student Answer: a function of the interest rate only.

not important.

a function of both interest rates and other factors.

correctly matched to planned investment by the loanable funds market.

too small, so the government should promote savings.

Question 8. Question : The measured deficit would be larger if

Student Answer: it were calculated as the real deficit.

it were measured at full employment when the economy is actually below full employment.
Social Security revenues and expenditures were excluded.
revenues and expenditures of state and local governments were taken into account.
the trade deficit were taken into account.

Question 9. Question : In the Keynesian view, the primary purpose of fiscal policy is to

Student Answer: manipulate aggregate expenditure so that the equilibrium level of national income and output equals the full-employment level, Y*.
offset changes in international trade that result from decreasing the price of the currency.
keep the federal budget in balance over the course of the business cycle.

keep the federal budget in balance each year.

ensure that aggregate expenditure equals output.

Question 10. Question : The length of time it takes to realize that there is an economic problem is called

Student Answer: the recognition lag.

the implementation lag.

the impact lag.

the policy lag.