My final test of eco

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The largest component of U.S federal spending that contributes to the U.S. government budget deficit is

entitlements

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A property of an asset that makes it desirable for use as a means of settling debts maturing in the future is an

standard of deferring payment

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Which of the following is NOT a funchtion of money?

form of cerdit

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The two ways to define money are

the transactions approach and the liqiudity approach

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A problem with using fiscal policy to a fine-tune the is that

agreeing on the appropriate fiscal is time consuming

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A fedral deficit of $300 billon means that

the government is spending $300 billon a year more than it is collecting in taxes

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To evaluate relative changes in the net public debt, we must

compare it to the nation's real GDP

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The degree to which an asset can be acquired or disposed of without much loss of nominal value or trasaction costs is known as

liquidity

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The proposition that an incrase in the federal budgt deficit caused entirely by a current tax cut has no effect on aggregate demand is called the

Ricardian equivalence theorem

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Are federal budg deficits related to trade deficits?

Yes.As deficits spending goes up, it is likely government borrowing will,too. Then foreign residents who lend funds to the U.S have less to spend on our goods,so U.S expots will fall.

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The Fed buys securities and gives a bond dealer a check for the amount. After the check has cleared

reserves have risen by the amount of the check because the Fed clears the check by increasing the amount of the bank's deposits with the Fed.

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All of the following are automatic stabilizers EXCEPT

discretionary tax cuts

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The amount of the time that it takes between recognizing an economic problem and implementing policy to solve it is

the action time lag

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If Peter cashes a $10,000 check and puts the in his home safe, this is an example of

a currency drain.

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Supply-side economist argue that changes in tax rates cause changes in

all of the above.

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All of the following are automatic fiscal stabilizers EXCEPT

a congressionally mandated decrease in tax rates to stimulate the economy.

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Which of the following actions could be undertaken if the government wants to close a recessionary gab?

Reduce taxes and reduce government spending.

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Fiscal policy refers to the

adjustment of government spending and taxes in order to achieve certain national economic goal

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In the long run, higher government budget deficits will

lead to a redistribution of real GDP from privately produced goods and services to government produced goods and services.

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An example of an automatic stabilizer is

the progressive tax system

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Refer to the above figure. Suppose the economy is operating at point A. There is recessionary gap of ........., which can be closed by ....

$2 trillion; expansionary fiscal policy that generates another $2 trillion in total spending

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Required reserves are

transaction deposits multiplied by the required reserve ratio

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The two ways in which deficit spending can impose a burden on future generations are

by requiring future generations to face higher taxes and to work with a lower accumulated stock of capital goods.

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In the above figure, if the relevant aggregate demand curve is AD2 and if the government wants to use fiscal policy to close the gap, it could

decrease government spending

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Refer to above figure. The economy is currenntly operating at point C, Which of the followig actions would you recommend to the president of the United States?

Engage in contractionary fiscal policy by reducing government spending.

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Created by: amaal123