Progressive Tax Rates – Principles of Macroeconomics Exam

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Progressive Tax Rates, Government Spending, Principles of Macroeconomics Final Exam

The key terms in this Macroeconomics course include Progressive Tax Rates, Government Spending, Marginal Propensity, Economy, Fiscal Policy , Time Lags, Crowding-Out, Principles of Macroeconomics.


If an initial increase in government spending of $100 billion leads to a total increase of $400 billion in income, the marginal propensity to consume in the economy is

0.75.

0.5.

0.8.

0.4.

−0.8.


Progressive tax rates, taxes on corporate profits, unemployment compensation, and welfare programs are all examples of

pro-cyclical fiscal policies.

automatic stabilizers.

monetary policies.

automatic balancers.

discretionary fiscal policies.


Time lags, crowding-out, and savings shifts are all

examples of countercyclical fiscal policy.

examples of automatic stabilizers.

arguments in favor of fiscal policy.

types of governmental policy.

issues that arise in the application of activist fiscal policy.


Which of the following fiscal policy initiatives focuses on the supply side of the economy?

personal tax refunds

higher marginal tax rates

building roads and bridges

increased pay for government employees

lower marginal income tax rates


Crowding-out occurs when

consumption increases when government spending increases.

time lags crowd out the effects of fiscal policy.

private spending falls in response to increases in government spending.

increases in government spending and decreases in taxes are offset by increases in savings.

supply-side fiscal policy does not increase total output.


The new classical critique of fiscal policy asserts that

increases in government spending and decreases in taxes are largely offset by increases in savings.

recognition lags make it difficult to time fiscal policy.

decreases in government spending and increases in taxes are largely offset by increases in savings.

implementation lags make it hard to get fiscal-policy proposals through the government.

impact lags make it difficult to know how much the spending multiplier will impact the total income in an economy.


Which of the following figures illustrates what happens when the government enters the loanable funds market in order to borrow?