Question

5. The U.S. economy is at full employment when strong economic growth in Asia increases the demand for​ U.S.-produced goods and services.

The Fed​ ______ face a tradeoff in the short run because​ ______.

A. does​ not; it will move both real GDP and the price level back to their desired levels

B. does​ not; it is impossible to decrease real GDP and the price level simultaneously

C. ​does; it must increase real GDP and decrease the price level simultaneously

D. does; it must decrease real GDP and increase the price level simultaneously

E. does​ not; a tradeoff is a​ long-run phenomena

6. The three ways in which the U.S. fiscal imbalance might be successfully addressed are​ _______.

A. raising income​ taxes, raising Social Security​ taxes, and cutting Social Security benefits

B. keep borrowing by selling government​ bonds, cutting Social Security​ benefits, and eliminate the Affordable Care Act

C. eliminating the generational​ imbalance, cutting other government​ spending, and raising Social Security taxes

D. raising income​ taxes, cutting other government​ spending, and keep borrowing by selling government bonds

7. Fiscal policy is the use of the federal budget to​ _______.

A. achieve the macroeconomic objectives of positive economic growth and zero unemployment

B. finance government activities

C. achieve the macroeconomic objectives of high and sustained economic growth and full employment

D. keep interest rates low and steady

8. A cut in the income tax rate​ ________ the tax wedge and​ ________ employment,​ saving, and investment.

A. does not​ change; increases   B. increases; increases C. ​decreases; does not change D. increases; decreases E. decreases; increases

9. Read Eye on Fiscal Stimulus.

How big was the fiscal stimulus package of​ 2008-2009, how many jobs was it expected to​ create, and how large was the multiplier implied by that​ expectation?

Did the stimulus​ work?

The fiscal stimulus package of 2008–2009 was​ ___？____.

The fiscal stimulus package of 2008–2009 was expected to create​ ____？___ jobs. The multiplier implied by that expectation is​ ___？____.

The stimulus​ _______ the expectations of the Obama administration because​ _______.

A. did not​ meet; Congress failed to spend all of the fiscal stimulus

B. met; 650,000 jobs were created by using a combination of discretionary and automatic fiscal policy

C. ​met; the multiplier was much smaller than 1.6

D. did not​ meet; the multiplier was much smaller than 1.6

Answer 1