revision questions chapter 29 pt2

Question 1

Which of the following is NOT a source of revenue for the UK government?

Answer 1

transfer paymenets

Question 2

An example of an automatic fiscal policy stabilizer is when

Answer 2

tax revenues decrease as real GDP decreases.

Question 3

The difference between the government debt and the budget deficit is

Answer 3

the budget deficit shows the annual discrepancy between government outlays and tax revenue and the government debt shows the accumulated balance of past government debts.

Question 4

The government’s budget deficit or surplus equals the

Answer 4

total tax revenue - total outlays.

Question 5

Economic data for a mythical economy in the years 2000-2004 are summarized in the figure above. Assume that the spending formulas and tax schedules are identical for all years. When the economy is above full employment, the government has a

Answer 5

budget surplus. (when govs revenue exceeds expenditure)

Question 6

A cyclical surplus is a

Answer 6

government budget surplus only because real GDP is greater than potential GDP.

Question 7

The government expenditures multiplier is the change in

Answer 7

equilibrium expenditure divided by the change in government expenditures.

Question 8

Which of the following is NOT a government outlay item?

Answer 8

Purchases of foreign bonds.