Which of the following is an example of discretionary fiscal policy? a. Income tax payments grow during an economic expansion. b. Congress spends an extra $2 billion to provide jobs for unemployed workers. c. Fewer workers receive unemployment compensation payments in an expansion. d. More people apply for and receive welfare benefits in a recession.

Which of the following is an example of an automatic stabilizer? A. the Works Progress Administration established during the Great Depression B. lump- sum taxes C. a balanced budget requirement for the government D. sales taxes E. economic stimulus checks from the government

What is the largest category of discretionary spending? Identify three additional examples of discretionary spending.

If a tax structure is progressive and we know that Tom pays $1,000 on his$10,000 income, then Alicia, who earns $30,000, must pay a. more than$3,000 in tax. b. exactly $3,000 in tax. c. less than$3,000 in tax. d. more than $4,000 in tax.

An ability-to-pay tax also is likely to be a. regressive. b. progressive. c. proportional. d. reactionary.

True or False. According to Keynes, prices and wages are quite inflexible—they are “sticky.”

True or False. Keynes believed that it was necessary for the government to balance its budget every year.

True or False. Taxes that fall more heavily on people who earn larger incomes represent the ability-to-pay principle of taxation.

True or False. The efficient level of production of a public good is found where the marginal benefit of additional units of that good is zero.

If electrical power is transmitted over long distances, the resistance of the wires becomes significant. Why? Which mode of transmission would result in less energy loss, high current and low voltage or low current and high voltage? Discuss.

Keynes believed that the ? would cause an increase in government spending or reduction in taxes to have a larger impact on aggregate demand.

Public goods are ? in consumption.

Which of the following is an automatic stabilizer for the economy? a. Congress decides to increase welfare benefits during a recession. b. An increase in income tax rates is passed by Congress during a period of inflation. c. More welfare compensation is paid because more people are unemployed in a recession. d. Congress decides to require people to work until they are 68 years old to collect their full Social Security benefit.

Which of the following is NOT a role of the Federal Reserve System? A. controlling bank reserves B. printing currency (Federal Reserve notes) C. carrying out monetary policy D. supervising and regulating banks E. holding reserves for commercial banks