1.) The cost of servicing the debt may increase if

A.)		The debt shrinks.
B.)		Deficits become smaller.
C.)		Interest rates rise.
D.)		The debt is held internally.

2.) When the Federal Reserve System buys bonds in the openmarket, the national debt

A.)		Must increase.
B.)		Must increase as long as the Fed buys only newly issuedbonds.
C.)		Is not affected.
D.)		Will decrease because the Fed is a government agency.

10.) A simultaneous increase of government purchases by $50billion and a tax hike of $50 billion should stimulate the economyby $50 billion.

True

False

14.) Joan Robinson, the author of The Second Crisis ofEconomic Theory, argued that the content of fiscal policy isas important as its aggregate impact on the economy.

True

False

16.) A $500 increase in government spending contains more fiscalstimulus than a $500 tax cut.

True

False

23.) A decrease in transfer payments works like a tax hikebecause it reduces the level of disposable income.

True

False

28.) Government taxes are an example of a policy lever.

True

False

30.) Balancing new government purchases with an equivalentincrease in taxes will avoid stimulus to the economy.

True

False