19 Dec 11) The Clinton administration inherited a budget
11) The Clinton administration inherited a budget deficit from its predecessor. President Clinton instituted major tax increases that A) increased the budget deficit during his entire term. B) brought the budget into balance and eventually into a surplus. C) reduced the budget deficit but increased the federal debt. D) reduced the size of the deficit but could not eliminate it.12) President George W. Bush used part of the budget surplus inherited from the Clinton administration to A) fund tax cuts. B) stimulate the economy that was slowing down following the end of the high-tech investment boom. C) increase government entitlement spending. D) both A and B13) In 2003, the Bush administration revised the tax bill to include provisions to A) delay tax increases from the 2001 bill. B) decrease the child tax credit. C) lower taxes on dividends. D) increase taxes on capital gains.14) The prospect of future deficits A) encourages government to conduct expansionary fiscal policy. B) would prompt government to vastly expand discretionary spending. C) requires a government to eliminate all entitlement spending. D) limits the ability of government to conduct fiscal policy in the near future.15) The federal deficit ________ in 2006 and 2007, and ________ in 2008. A) increased; decreased B) increased, increased further C) decreased; increased D) decreased; decreased furtherRecall the Application about the success of the 2009 stimulus package to answer the following question(s).16) Recall the application. Economist John B. Taylor found that the temporary tax cuts which were a part of the 2009 stimulus package A) were very successful in stimulating consumption spending. B) did very little to stimulate consumption spending. C) were split very evenly between consumption spending and household saving. D) were primarily used to pay off home mortgage balances.17) Recall the application. Economist John B. Taylor found that the aid to state and local governments which were a part of the 2009 stimulus package were used primarily to A) increase spending on goods and services. B) increase spending on transfer programs, but spending on goods and services declined. C) increase spending on transfer programs, goods, and services. D) increase spending on infrastructure, but spending on transfer programs declined.18) The Obama stimulus package was implemented to assist the economy in its recovery from recession. This package was designed to shift A) aggregate demand to the right. B) aggregate demand to the left. C) aggregate supply to the left. D) aggregate demand and aggregate supply to the left.19) The Obama stimulus package included fiscal policy actions designed to assist the economy in its recovery from recession. These fiscal policy actions would include ________ government spending and ________ taxes. A) increasing; decreasing B) decreasing; increasing C) increasing; Increasing D) decreasing; decreasing20) At the beginning of the Vietnam War, increased military spending in the United States decreased unemployment.21) An estimate of a household’s long-run average income is called permanent income.22) Consumers often base their spending on their estimated permanent income.23) Temporary tax cuts tend to stimulate consumer spending at the same rate as permanent tax cuts.24) The tax cuts of 2008 were valued at approximately one% of GDP.