Government Studies Multiple Questions

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1. Social insurance programs are ______.

government programs intended to protect families against economic hardships
private insurance policies to protect families from hardships caused by government actions
private insurance policies that cover gaps in government provided health care
none of the above2. Which of the following is NOT an example of government purchases of goods and services?
a federal prosecutor’s salary in a lawsuit against Halliburton
new pavement for interstate highway I-95
a surgeon’s bill reimbursed under the Medicare program
equipping air marshals with taser guns3. If the economy is at potential output, and consumption spending suddenly decreases due to a fall in consumer confidence, the appropriate fiscal policy is ______.
a decrease in government transfers
an increase in government spending
a decrease in government spending
an increase in the money supply to decrease interest rates

4. To close an inflationary gap employing fiscal policy, the government could ______.

reduce budget allocations to interstate highway maintenance
increase federal subsidies to state universities
lower the corporate income tax rate
raise the average amount awarded for a disability pension5. Government’s efforts to stabilize the business cycle through fiscal policy can destabilize the economy due to the presence of _______.
lags in the process of crafting a budget appropriate to the circumstances
a negative interaction between fiscal and monetary policy due to the multiplier effect
a tendency of prices to change faster than the interest rate
business cycles that are closely synchronized to the political cycle6. Changes in taxes and government transfers shift the aggregate demand curve ______ equal-sized changes in government purchases.
by more than
by exactly as much as
by less than
in inverse proportion to

7. The presence of automatic stabilizer in government tax revenue that occurs when GDP rises _______.

has no impact on the size of the multiplier
increases the size of the multiplier
decreases the size of the multiplier
may either increase or decrease the size of the multiplier8. The budget balance is calculated as ______.
T – G – TR
T + G – TR
T – G + TR
T + G + TR9. The larger the amount of outstanding public debt ______.

the lower the tax revenue the government would be required to collect
the lower the spending the government would be able to afford
the smaller the crowding out of private investment spending
the larger the fraction of the federal budget deficit that must be devoted to interest payments10. Implicit liabilities of a government are _______.
bonds held by foreigners
spending promises, like social security benefits, that are effectively debt although no bond is associated with the promise
&nb�nsx.�i5 debt of a country adjusted for the price ratio
<� tix.�i5 type=”radio” value=”4″ name=”MC10″ /> the ratio of the debt of a country to its GDP

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Government Studies Multiple Questions