Macroeconomics Principles and Policy 13th Edition by William J. Baumol – Test Bank

True / False

1. Fiscal policy is the use of taxes and spending by the government to affect aggregate demand.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Aggregate demand and aggre – DISC: Aggregate demand and aggregate supply
NATIONAL STANDARDS: United States – BPROG: Analytic
ACCREDITING STANDARDS: Aggregate demand and aggregate s – Aggregate demand and aggregate supply
TOPICS: Issue: The Great Debate over Fiscal Stimulus
KEYWORDS: BLOOM’S: Comprehension

2. In 2009, the U.S. economy was experiencing an inflationary gap.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Aggregate demand and aggre – DISC: Aggregate demand and aggregate supply
NATIONAL STANDARDS: United States – BPROG: Analytic
ACCREDITING STANDARDS: Aggregate demand and aggregate s – Aggregate demand and aggregate supply
TOPICS: Issue: The Great Debate over Fiscal Stimulus
KEYWORDS: BLOOM’S: Comprehension

3. Most tax payments increase as GDP increases.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Monetary and fiscal policy
NATIONAL STANDARDS: United States – BPROG: Analytic
ACCREDITING STANDARDS: Monetary and fiscal policy
TOPICS: Income Taxes and the Consumption Schedule
KEYWORDS: BLOOM’S: Comprehension

4. Taxes constitute the difference between GDP and disposable income.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Monetary and fiscal policy
NATIONAL STANDARDS: United States – BPROG: Analytic
ACCREDITING STANDARDS: Monetary and fiscal policy
TOPICS: Income Taxes and the Consumption Schedule
KEYWORDS: BLOOM’S: Comprehension

5. When taxes are decreased, disposable income increases even though GDP is unchanged.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Monetary and fiscal policy
NATIONAL STANDARDS: United States – BPROG: Analytic
ACCREDITING STANDARDS: Monetary and fiscal policy
TOPICS: Income Taxes and the Consumption Schedule
KEYWORDS: BLOOM’S: Comprehension

6. A tax reduction shifts the consumption schedule downward.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Monetary and fiscal policy
NATIONAL STANDARDS: United States – BPROG: Analytic
ACCREDITING STANDARDS: Monetary and fiscal policy
TOPICS: Income Taxes and the Consumption Schedule
KEYWORDS: BLOOM’S: Comprehension

7. The personal income tax varies as GDP changes.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Monetary and fiscal policy
NATIONAL STANDARDS: United States – BPROG: Analytic
ACCREDITING STANDARDS: Monetary and fiscal policy
TOPICS: Income Taxes and the Consumption Schedule
KEYWORDS: BLOOM’S: Comprehension

8. Government spending influences spending indirectly.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Monetary and fiscal policy
NATIONAL STANDARDS: United States – BPROG: Analytic
ACCREDITING STANDARDS: Monetary and fiscal policy
TOPICS: Income Taxes and the Consumption Schedule
KEYWORDS: BLOOM’S: Comprehension

9. The multiplier is increased when income taxes are included.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Monetary and fiscal policy
NATIONAL STANDARDS: United States – BPROG: Analytic
ACCREDITING STANDARDS: Monetary and fiscal policy
TOPICS: The Multiplier Revisited
KEYWORDS: BLOOM’S: Comprehension

10. The addition of imports reduces the value of the multiplier.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Monetary and fiscal policy
NATIONAL STANDARDS: United States – BPROG: Analytic
ACCREDITING STANDARDS: Monetary and fiscal policy
TOPICS: The Multiplier Revisited
KEYWORDS: BLOOM’S: Comprehension