ECO 302 Week 9 Quiz - Strayer

ECO 302 Week 9 Quiz - Strayer

Click on The Link Below to Purchase A+ Graded Course Material

http://budapp.net/ECO-302-Week-9-Quiz-Strayer-356.htm

Chapter 14 and 15

TRUE/FALSE

1. When a country has a deficit, its debt is growing.



2. A pay as you go social security system raises the capital stock.



3. If government budget is in deficit, then real government saving is in surplus.



4. If the government runs a deficit, households will feel wealthier.



5. A budget deficit caused by changing labor income taxes changes the labor and production.



6. The debt-to-GDP ratio typically rises during a recession.



7. The major peaks in the ratio of public debt to GDP in the U.S. reflect expenditures on Social Security.



8. Real national saving equals net investment.



9. Real government saving is positive when the real public debt increases.



10. If government expediture exceeds government revenue, then the government has a budget surplus.



MULTIPLE CHOICE

1. The governments sources of funds include:
a. taxes. c. borrowing.
b. printing money. d. all of the above.




2. The governments sources of funds include:
a. taxes. c. paying interest on past bonds.
b. government purchases. d. all of the above.




3. The governments sources of funds include:
a. transfer payments. c. paying interest on the government debt.
b. printing money. d. all of the above.




4. The governments sources of funds include:
a. government purchases. c. borrowing.
b. transfer payments. d. all of the above.




5. The governments uses of funds include:
a. government purchases. c. paying interest on the past government debt.
b. transfer payments. d. all of the above.




6. The governments uses of funds include:
a. government purchases. c. printing money.
b. borrowing. d. all of the above.




7. The governments uses of funds include:
a. printing money. c. taxes.
b. transfer payments. d. all of the above.




8. The governments uses of funds include:
a. borrowing. c. paying interest on the past government debt.
b. printing money. d. all of the above.




9. A balanced government budget is one where:
a. government purchases equal taxes. c. the governments real savings is zero.
b. government debt is zero. d. all of the above.




10. Total bond holding of all households is Bgt because:
a. the quantity of all private bonds held by the public is zero. c. the public views government bonds as less risky than private bonds.
b. the quantity of all government bonds held by the public is zero. d. the public views private bonds as less risky than government bonds.




11. Total bond holding of all households is equal to
a. the quantity of all private bonds. c. the quantity of all private bonds plus all government bonds.
b. the quantity of all government bonds. d. the quantity of all private bonds minus all government bonds.




12. If money and the price level are constant, then the government’s real budget deficit is:
a. (Bgt - Bgt-1)/P. c. (Bt + Bgt)/P.
b. Bgt/P. d. none of the above.




13. If money and the price level are constant, then the government’s real budget debt is:
a. (Bgt - Bgt-1)/P. c. (Bt + Bgt)/P.
b. Bgt/P. d. none of the above.




14. If the government reduces taxes by $1 this year without raising taxes or printing more money, then
a. future tax liabilities will rise by $1 plus the interest, R, that must be paid on the borrowing. c. future tax liabilities will fall by $1 plus the interest, R, that must be paid on the borrowing.
b. future tax liabilities will rise by $1 less the interest, R, that must be paid on the borrowing. d. future tax liabilities will fall by $1 less the interest, R, that must be paid on the borrowing.




15. Ricardian equivalence implies that a government budget deficit:
a. increases current consumption. c. reduces national saving.
b. increases future tax liabilities. d. all of the above.




16. Ricardian equivalence holds:
a. only for year to year changes in the governments budget. c. only with a government deficit not a surplus.
b. no matter how long until the bonds are to be paid off. d. only with a government surplus not a deficit.




17. A strategic budget deficit is designed to:
a. increase GDP. c. constrain the behavior of future governments.
b. increase economic activity. d. all of the above.




18. The standard view of the budget deficit is that it:
a. reduces the GDP in the long run. c. reduces the capital stock in the long run.
b. reduces investment. d. all of the above.




19. The standard view of the budget deficit is that it:
a. reduces the GDP in the long run. c. increases the capital stock in the long run.
b. increases investment. d. all of the above.




20. The standard view of the budget deficit is that it:
a. increases the GDP in the long run. c. increases the capital stock in the long run.
b. reduces investment. d. all of the above.




21. The standard view of the budget deficit is that it:
a. increases the GDP in the long run. c. reduces the capital stock in the long run.
b. increases investment. d. all of the above.




22. The standard view of the budget deficit is that a deficit:
a. does not affect the economy in the long run. c. does not affect the economy in the short run.
b. and the public debt are a burden on the economy. d. encourages economic growth.




23. Households may feel wealthier due to a tax cut, if:
a. they are very concerned about future generations. c. they are using an infinite planning horizon.
b. they expect the bonds created by the deficit to be paid off after their lifetime. d. they plan to leave a bequest to their heirs.




24. Households may feel wealthier due to a tax cut, if:
a. they are not able to borrow as much against future earnings as they wish. c. they care a lot about future generations.
b. they are not able to lend present earnings as much as they wish. d. they plan to leave a bequest to their heirs.




25. If households ignore effects on future generations, a pay as you go social security system:
a. reduces current national savings. c. reduces the future capital stock.
b. reduces investment. d. all of the above.




26. If households ignore effects on future generations, a pay as you go social security system:
a. reduces current national savings. c. raises the future capital stock.
b. raises investment. d. all of the above.




27. If households ignore effects on future generations, a pay as you go social security system:
a. raises current national savings. c. raises the future capital stock.
b. reduces investment. d. all of the above.




28. If households ignore effects on future generations, a pay as you go social security system:
a. raises current national savings. c. reduces the future capital stock.
b. raises investment. d. all of the above.




29. If households ignore effects on future generations when a pay as you go social security system starts, the then elderly:
a. have a positive income effect on their consumption. c. receive low returns on any taxes paid into the system.
b. receive benefits that in present value is less the present value of their contributions. d. all of the above.




30. If households ignore effects on future generations, when a pay as you go social security system starts, the then elderly:
a. have a negative income effect on their consumption. c. receive low returns on any taxes paid into the system.
b. receive benefits that in present value is greater than the present value of their contributions to the system. d. all of the above.




31. If households ignore effects on future generations, a pay as you go social security system:
a. increases consumption. c. reduces national saving.
b. reduces the capital stock in the long run. d. all of the above.




32. If households ignore effects on future generations, a pay as you go social security system:
a. increases consumption. c. increases national saving.
b. increases the capital stock in the long run. d. all of the above.




33. If households ignore effects on future generations, a pay as you go social security system:
a. decreases consumption. c. raises national saving.
b. reduces the capital stock in the long run. d. all of the above.




34. If households ignore effects on future generations, a pay as you go social security system:
a. decreases consumption. c. reduces national saving.
b. increases the capital stock in the long run. d. all of the above.




35. If households ignore effects on future generations, a pay as you go social security system:
a. reduces investment. c. reduces private saving.
b. reduces GDP in the long run. d. all of the above.




36. If households ignore effects on future generations, a pay as you go social security system:
a. reduces investment. c. increases private saving.
b. increases GDP in the long run. d. all of the above.




37. If households ignore effects on future generations, a pay as you go social security system:
a. raises investment. c. raises private saving.
b. reduces GDP in the long run. d. all of the above.




38. If households ignore effects on future generations, a pay as you go social security system:
a. raises investment. c. reduces private saving.
b. increases GDP in the long run. d. all of the above.




39. A pay as you go social security system only increase consumption and reduces investment, if:
a. households leave bequests. c. if the planning horizon is overlapping generations.
b. if households neglect the adverse affects on their descendants. d. households increase their savings.




40. If currently alive households take full account of the negative affects of a pay as you go social security system on their descendants, then the:
a. effects are magnified. c. effects are exponential.
b. effects are nil. d. effects are unchanged.