Quiz: Study Game - Topic 5.5 (macroeconomics - crowding out


Study Game - Topic 5.5Online version Crowding Out by Zachary Foust 1 An increase in government spending financed by borrowing will result in which of the following? a Private savings will decrease in the short-run. b The real interest rate will decrease in the short-run. c Interest-sensitive private sector spending will increase in the short-run. d The rate of physical capital accumulation will decrease in the long-run. 2 The table provides the values, in billions of dollars, of selected macroeconomic variables for a nation at the current real interest rate. The nation is a closed economy with no international transactions. Based on the table above, which of the following is most likely true? a The government has a budget surplus. b The government is borrowing. c Public savings exceeds private savings. d National debt is decreasing. 3 The table provides the values, in billions of dollars, of selected macroeconomic variables for a nation at the current real interest rate. The nation is a closed economy with no international transactions. Based on the table above, what will happen to the real interest rate in the loanable funds market and private investment spending in plant and equipment? a The real interest rate will increase, and private investment spending will increase. b The real interest rate will increase, and private investment spending will decrease. c The real interest rate will decrease, and private investment spending will decrease. d The real interest rate will decrease, and private investment spending will increase. 4 Suppose that in 2017 government outlays exceeded tax revenues. An increase in government purchases in 2018, with no other budgetary changes, would lead to which of the following from 2017 to 2018? a An increase in the government budget surplus b A decrease in the government budget surplus c An increase in the government budget defict d A decrease in the government budget deficit 5 If the total of government spending plus government transfer payments is less than tax revenues, which of the following must be true? a The national debt will increase. b There is a recessionary gap. c The government is in surplus. d The velocity of money will increase. 6 The national debt is equal to which of the following? a The value of all government bonds held by the nation's central bank b The value of all loans in the nation's banking system c The current government budget deficit d The sum of all past government budget deficits and surpluses 7 An economy is in long-run equilibrium. If the central bank reduces the growth rate of the money supply, which of the following must occur in the long-run? a The inflation rate will decrease. b The unemployment rate will decrease. c The long-run aggregate supply curve will shift to the left. d The long-run Phillips curve will shift to the left. 8 Country X's economy is currently at full employment. Assume Country X's central bank increases the money supply by 2 percent over a prolonged period. According to the quantity theory of money, which of the following will happen in the long-run for a given velocity of money? a Unemployment will increase by 2%. b Real output will increase by 2%. c Nominal output will increase by 2% d The price level will decrease by 2%. 9 According to the quantity theory of money, if the money supply is $40 billion, real output is $100 billion, and the price level is 1.2, what is the velocity of money? a 1.2 b 2.5 c 3.0 d 3.5 10 What is crowding out? a The reduction in private investment spending that occurs when the government increases borrowing. b The reduction in consumer spending that occurs when there is an increase in taxes. c The reduction in net exports that occurs when the dollar appreciates. d The reduction in imports that occurs when the government imposes new tariffs. 11 What is government borrowing? a The budget deficit b The budget surplus c The national debt d The budget balance 12 What is the national debt? a All past budget deficits minus budget surpluses. b All past budget deficits plus budget surpluses. c All past budget surpluses minus budget deficits. d All past budget surpluses plus budget deficits. 13 What is a budget deficit? a When government expenditures exceed tax revenue b When tax revenue exceeds government expenditures c When tax revenue equals government expenditures d When government expenditures exceed investment spending 14 What is a budget surplus? a When government expenditures exceed tax revenue b When tax revenue exceeds government expenditures c When tax revenue equals government expenditures d When government expenditures exceed investment spending 15 What is the budget balance? a The difference between tax revenue and government spending b The difference between exports and imports c The difference between revenue and cost d The difference between saving and investment 16 What is the velocity of money? a The average number of times a unit of currency is spent in a year b Income after taxes and transfers c Another name for an open-market purchase of bonds d The number of times an initial amount of spending grows 17 What is the quantity theory of money? a In the long-run, an increase in the money supply leads to an increase in the price level. b In the long-run, changes in the money supply have no effect on the inflation rate. c In the short-run, changes in the money supply have no effect on real output. d In the short-run, an increase in the money supply leads to a decrease in the price level.

1

An increase in government spending financed by borrowing will result in which of the following?

a

Private savings will decrease in the short-run.

b

The real interest rate will decrease in the short-run.

c

Interest-sensitive private sector spending will increase in the short-run.

d

The rate of physical capital accumulation will decrease in the long-run.

2

The table provides the values, in billions of dollars, of selected macroeconomic variables for a nation at the current real interest rate. The nation is a closed economy with no international transactions. Based on the table above, which of the following is most likely true?

a

The government has a budget surplus.

b

The government is borrowing.

c

Public savings exceeds private savings.

d

National debt is decreasing.

3

The table provides the values, in billions of dollars, of selected macroeconomic variables for a nation at the current real interest rate. The nation is a closed economy with no international transactions. Based on the table above, what will happen to the real interest rate in the loanable funds market and private investment spending in plant and equipment?

a

The real interest rate will increase, and private investment spending will increase.

b

The real interest rate will increase, and private investment spending will decrease.

c

The real interest rate will decrease, and private investment spending will decrease.

d

The real interest rate will decrease, and private investment spending will increase.

4

Suppose that in 2017 government outlays exceeded tax revenues. An increase in government purchases in 2018, with no other budgetary changes, would lead to which of the following from 2017 to 2018?

a

An increase in the government budget surplus

b

A decrease in the government budget surplus

c

An increase in the government budget defict

d

A decrease in the government budget deficit

5

If the total of government spending plus government transfer payments is less than tax revenues, which of the following must be true?

a

The national debt will increase.

b

There is a recessionary gap.

c

The government is in surplus.

d

The velocity of money will increase.

6

The national debt is equal to which of the following?

a

The value of all government bonds held by the nation's central bank

b

The value of all loans in the nation's banking system

c

The current government budget deficit

d

The sum of all past government budget deficits and surpluses

7

An economy is in long-run equilibrium. If the central bank reduces the growth rate of the money supply, which of the following must occur in the long-run?

a

The inflation rate will decrease.

b

The unemployment rate will decrease.

c

The long-run aggregate supply curve will shift to the left.

d

The long-run Phillips curve will shift to the left.

8

Country X's economy is currently at full employment. Assume Country X's central bank increases the money supply by 2 percent over a prolonged period. According to the quantity theory of money, which of the following will happen in the long-run for a given velocity of money?

a

Unemployment will increase by 2%.

b

Real output will increase by 2%.

c

Nominal output will increase by 2%

d

The price level will decrease by 2%.

9

According to the quantity theory of money, if the money supply is $40 billion, real output is $100 billion, and the price level is 1.2, what is the velocity of money?

a

1.2

b

2.5

c

3.0

d

3.5

10

What is crowding out?

a

The reduction in private investment spending that occurs when the government increases borrowing.

b

The reduction in consumer spending that occurs when there is an increase in taxes.

c

The reduction in net exports that occurs when the dollar appreciates.

d

The reduction in imports that occurs when the government imposes new tariffs.

11

What is government borrowing?

a

The budget deficit

b

The budget surplus

c

The national debt

d

The budget balance

12

What is the national debt?

a

All past budget deficits minus budget surpluses.

b

All past budget deficits plus budget surpluses.

c

All past budget surpluses minus budget deficits.

d

All past budget surpluses plus budget deficits.

13

What is a budget deficit?

a

When government expenditures exceed tax revenue

b

When tax revenue exceeds government expenditures

c

When tax revenue equals government expenditures

d

When government expenditures exceed investment spending

14

What is a budget surplus?

a

When government expenditures exceed tax revenue

b

When tax revenue exceeds government expenditures

c

When tax revenue equals government expenditures

d

When government expenditures exceed investment spending

15

What is the budget balance?

a

The difference between tax revenue and government spending

b

The difference between exports and imports

c

The difference between revenue and cost

d

The difference between saving and investment

16

What is the velocity of money?

a

The average number of times a unit of currency is spent in a year

b

Income after taxes and transfers

c

Another name for an open-market purchase of bonds

d

The number of times an initial amount of spending grows

17

What is the quantity theory of money?

a

In the long-run, an increase in the money supply leads to an increase in the price level.

b

In the long-run, changes in the money supply have no effect on the inflation rate.

c

In the short-run, changes in the money supply have no effect on real output.

d

In the short-run, an increase in the money supply leads to a decrease in the price level.

You can integrate the game into an LMS compatible with LTI 1.1 or LTI 1.3 such as Canvas, Moodle, or Blackboard. This way, the scores will be automatically saved into the platform’s gradebook.

Study Game - Topic 5.5

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Study Game - Topic 5.5Online version

by Zachary Foust

An increase in government spending financed by borrowing will result in which of the following?

The table provides the values, in billions of dollars, of selected macroeconomic variables for a nation at the current real interest rate. The nation is a closed economy with no international transactions. Based on the table above, which of the following is most likely true?

Suppose that in 2017 government outlays exceeded tax revenues. An increase in government purchases in 2018, with no other budgetary changes, would lead to which of the following from 2017 to 2018?

If the total of government spending plus government transfer payments is less than tax revenues, which of the following must be true?

The national debt is equal to which of the following?

An economy is in long-run equilibrium. If the central bank reduces the growth rate of the money supply, which of the following must occur in the long-run?

Country X's economy is currently at full employment. Assume Country X's central bank increases the money supply by 2 percent over a prolonged period. According to the quantity theory of money, which of the following will happen in the long-run for a given velocity of money?

According to the quantity theory of money, if the money supply is $40 billion, real output is $100 billion, and the price level is 1.2, what is the velocity of money?

What is crowding out?

What is government borrowing?

What is the national debt?

What is a budget deficit?

What is a budget surplus?

What is the budget balance?

What is the velocity of money?

What is the quantity theory of money?

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