If the government raises taxes, what will this do to the AD curve? Question 5 op
ID: 1103890 • Letter: I
Question
If the government raises taxes, what will this do to the AD curve?
Question 5 options:
a)
b)
c)
d)
When economists warn about the crowding-out effect, they are referring to:
Question 6 options:
a)
b)
c)
d)
All of the following programs are considered mandatory spending EXCEPT:
Question 7 options:
a)
b)
c)
d)
What is the one major category that separates national debt from public debt?
Question 8 options:
a)
b)
c)
d)
Which of the following is a form of U.S. public debt?
Question 9 options:
a)
b)
c)
d)
Automatic stabilizers have _____ effects during times of economic prosperity and _____ effects during times of economic downturn.
Question 10 options:
a)
b)
c)
d)
Which of the following is an example of an automatic stabilizer?
Question 11 options:
a)
b)
c)
d)
Evidence has suggested that borrowing is _____ than taxation by politicians to finance fiscal policy spending, which has led to a(n) _____ of the federal government over the last few decades.
Question 12 options:
a)
b)
c)
d)
If a government collects $550 billion in taxes and spends $700 billion, it would have a:
Question 13 options:
a)
b)
c)
d)
The portion of the national debt that is not held by the Federal Reserve and government agencies include:
Question 14 options:
a)
b)
c)
d)
Reducing government spending, reducing transfer payments, or raising taxes describes which policy?
Question 15 options:
a)
b)
c)
d)
a)
AD shifts left.b)
AD shifts right.c)
AD would not shift.d)
AD would shift but in a random direction.Explanation / Answer
(Question 5) Option (a)
Higher tax will lower disposable income, consumption demand & aggregate demand, shifting AD left.
(Question 6) Option (d)
Government finances its budget deficit by borrowing, which raises market interest rate. Higher interest rate lowers investment demand.
(Question 7) Option (d)
Defense spending is a discretionary spending.
(Question 8) Option (a)
External debt is a component of national debt, but not of public debt (which is domestic).
(Question 9) Option (d)
Bonds are borrowings by governments in form of a financial instrument with an obligation to pay.
(Question 10) Option (b)
NOTE: First 6 questions are answered.