Question 1

Transfer payments include ________

Accepted Answer

A)   government aid to the poor.
B)   unemployment Insurance.
C)   social security.
D)   all of the above.E) A) and C)
F) None of the above

Question 2

Which of the following is not a policy taken by an Arab country to lessen the adverse effects of the 2008 economic crisis?

Accepted Answer

A)   Labor-intensive, small-scale income generating projects for young people.
B)   Increased public spending to maintain construction projects.
C)   Subsidizing the price of basic goods.
D)   Tax increases on medium and small businesses.E) C) and D)
F) B) and C)

Question 3

The central bank Reserve plays a larger role than the government in stabilizing the economy because

Accepted Answer

A)   changes in interest rates have their full effect on the economy in a short period of time, whereas changes in government spending and taxes have their full effect over a long period of time.
B)   the central bank can immediately recognize when real GDP is below or above potential GDP.
C)   the central bank can more quickly change monetary policy than the government can change fiscal policy.
D)   changes in interest rates have a considerably larger effect on the economy than changes in government purchases or taxes.E) None of the above
F) B) and C) C

Question 4

What is the key reason why Lebanon's fiscal policy was unsustainable?

Accepted Answer

A)   Lebanon was aiming to reach EU levels of debt at lower than 60% of GDP.
B)   Two-thirds of government expenditure is allocated to interest repayments and wages.
C)   The 2008 global financial crisis had increase Lebanese remittances.
D)   Growth was only 3 percent in 2009.E) A) and B)
F) None of the above

Question 5

Timing stabilization policy is easier using monetary policy than fiscal policy.

Accepted Answer

A) True 
 B)False

Question 6

The government debt equals

Accepted Answer

A)   the accumulation of past budget deficits.
B)   tax revenues minus government spending.
C)   the total value of the government Treasury bonds outstanding.
D)   government spending minus tax revenues.E) B) and C)
F) None of the above C

Question 7

Stabilization policy is used by the government to

Accepted Answer

A)   offset the effects of the business cycle on the economy.
B)   offset the effects of inflation.
C)   stabilize foreign -exchange rates.
D)   stabilize interest rates.E) B) and D)
F) C) and D) A

Question 8

The sharp increase in the percentage of government purchases to GDP in Kuwait in 1991 is due to________

Accepted Answer

A)   the Kuwaiti government was trying to be the highest GCC country in terms of government purchases.
B)   a revolution by the youth of Kuwait demanding more government purchases.
C)   the Gulf War at the time.
D)   None of the above.E) A) and C)
F) C) and D)

Question 9

Suppose real GDP is $12.1 trillion and potential GDP is $12.6 trillion. To move the economy back to potential GDP, the parliament should

Accepted Answer

A)   lower taxes by an amount less than $500 billion.
B)   lower government purchases by $500 billion.
C)   lower taxes by $500 billion.
D)   raise government purchases by more than $500 billion.
E)   raise government purchases by $500 billion.F) D) and E)
G) A) and E)

Question 10

Which of the following is considered a weakness of the flat tax?

Accepted Answer

A)   The complexity of the tax system would increase under the flat tax.
B)   Tax compliance would decrease if the tax were implemented.
C)   Savings and investment would decline under the flat tax.
D)   The distribution of income would be more unequal under the tax.E) A) and B)
F) A) and C)

Question 11

Fiscal policy is determined by the

Accepted Answer

A)   the parliament and the central bank.
B)   president/king and the parliament.
C)   the central bank.
D)   president/king and the central bank.E) A) and B)
F) C) and D)

Question 12

You would expect less fluctuation in the percentage of government purchases to GDP of nonoil-based Arab economies relative to that of oil-based Arab economies. Why is that?

Accepted Answer

A)   Oil-based Arab countries change their government expenditure plans dramatically each year.
B)   Governments in nonoil-based Arab economies know how to manage resources better.
C)   Government purchases in oil-based Arab economies are financed by receipts of oil revenues. Therefore, they fluctuate according to oil prices.
D)   All of the above.E) B) and D)
F) B) and C)

Question 13

According to economist Christopher Ruhm, during recessions the unemployed may experience improved health due to more available time to exercise, prepare healthy meals, and visit their doctors.

Accepted Answer

A) True 
 B)False

Exam 23: Fiscal Policy

Transfer payments include ________

Correct Answer
verified

Which of the following is not a policy taken by an Arab country to lessen the adverse effects of the 2008 economic crisis?

Correct Answer
verified

The central bank Reserve plays a larger role than the government in stabilizing the economy because

Correct Answer
verified
C

What is the key reason why Lebanon's fiscal policy was unsustainable?

Correct Answer
verified

Timing stabilization policy is easier using monetary policy than fiscal policy.

Correct Answer
verified

The government debt equals

Correct Answer
verified
C

Stabilization policy is used by the government to

Correct Answer
verified
A

The sharp increase in the percentage of government purchases to GDP in Kuwait in 1991 is due to________

Correct Answer
verified

Suppose real GDP is $12.1 trillion and potential GDP is $12.6 trillion. To move the economy back to potential GDP, the parliament should

Correct Answer
verified

Which of the following is considered a weakness of the flat tax?

Correct Answer
verified

Fiscal policy is determined by the

Correct Answer
verified

You would expect less fluctuation in the percentage of government purchases to GDP of nonoil-based Arab economies relative to that of oil-based Arab economies. Why is that?

Correct Answer
verified

According to economist Christopher Ruhm, during recessions the unemployed may experience improved health due to more available time to exercise, prepare healthy meals, and visit their doctors.

Correct Answer
verified

Exam 23: Fiscal Policy

Transfer payments include ________

Correct AnswerverifiedShow Answer

Which of the following is not a policy taken by an Arab country to lessen the adverse effects of the 2008 economic crisis?

Correct AnswerverifiedShow Answer

The central bank Reserve plays a larger role than the government in stabilizing the economy because

Correct AnswerverifiedC

What is the key reason why Lebanon's fiscal policy was unsustainable?

Correct AnswerverifiedShow Answer

Timing stabilization policy is easier using monetary policy than fiscal policy.

Correct AnswerverifiedShow Answer

The government debt equals

Correct AnswerverifiedC

Stabilization policy is used by the government to

Correct AnswerverifiedA

The sharp increase in the percentage of government purchases to GDP in Kuwait in 1991 is due to________

Correct AnswerverifiedShow Answer

Suppose real GDP is $12.1 trillion and potential GDP is $12.6 trillion. To move the economy back to potential GDP, the parliament should

Correct AnswerverifiedShow Answer

Which of the following is considered a weakness of the flat tax?

Correct AnswerverifiedShow Answer

Fiscal policy is determined by the

Correct AnswerverifiedShow Answer

You would expect less fluctuation in the percentage of government purchases to GDP of nonoil-based Arab economies relative to that of oil-based Arab economies. Why is that?

Correct AnswerverifiedShow Answer

According to economist Christopher Ruhm, during recessions the unemployed may experience improved health due to more available time to exercise, prepare healthy meals, and visit their doctors.

Correct AnswerverifiedShow Answer

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C

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C

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A

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