ECON 214 Exam 3 Liberty University Solution

Question 1 Using a credit card is most like:

Question 2 The bank in your hometown has decided to double the number of its local branch offices. How will this affect the bank’s balance sheet?

Question 3 A U.S. federal government budget deficit occurs when:

Question 4 Suppose you land a job with Google right out of college. Your economics training is very valuable to them, so you receive a starting annual salary of $65,000. What is the total amount of social insurance taxes you will be responsible for after your first year of work?

Question 5 An example of the multiplier effect is when:

Question 6 The funds used for payments to Medicare recipients come primarily from:

Question 7 If the marginal propensity to consume is equal to 0.75, the spending multiplier is equal to:

Question 8 Refer to the following table to answer the questions that follow. Using the table, what is the marginal income tax rate of a $5,000 raise for someone who currently makes $85,650 per year?

Question 9 Which of the following is NOT considered part of M2?

Question 10 A budget is:

Question 17 Supply­side fiscal policy involves the use of:

Question 18 The largest component of M2 is:

Question 19 Use the following example to answer the questions that follow: Imagine that you deposit $25,000 in currency (which you had been storing in your closet), into your checking account at the bank. Assume that this institution has a required reserve ratio of 25%. As a result of this deposit, by how much will the bank’s required reserves increase?

Question 20 An implementation lag happens because:

Question 21 Some proponents of entitlement­program reform suggest indexing Social Security benefits to the consumer price index (CPI):

Question 27 In economic terms, how would you state what has happened when your neighbor says he is unwilling to help you mow your lawn because you are unwilling to help him teach his kids how to speak with a British accent?

Question 28 One argument for tax cuts when the government is running a budget deficit is:

Question 29 For something to be considered money, it must:

Question 30 Refer to the following table to answer the questions that follow. Using the table, what is the value of M2 that is not part of M1?

Question 31 Fiscal policy includes:

Question 32 ___________ is an example of an automatic stabilizer.

Question 33 A marginal tax rate is:

Question 34 Fiscal policy is:

Question 35 The “crowding­out” critique is based on the idea that:

Question 36 The United States has a:

Question 37 According to the U.S. Federal Tax Rates chart from the textbook (Figure 15.6), a person earning $100,000 in a given year is in the 28% tax bracket. How much will this individual owe in taxes for that year?

Question 38 Social Security and Medicare spending continue to grow and take up larger shares of the federal budget because:

Question 39 A progressive income tax system is one in which:

Question 40 In most nations, one or more governing bodies must approve government spending or new tax policies. This causes ___________ between setting fiscal policy and seeing its effects.