60.Mandatory spending, as opposed to discretionary spending, must work its way through Congress each year.

True

False

61.Which statement(s) is/are TRUE?

I. Changes in tax rates impact only aggregate demand.

II. According to the Laffer curve, if the tax rate is above 50%, lowering the tax rate will always raise tax revenue.

III. A repeal of existing investment tax credits will cause aggregate supply to shift to the left.

II and III only

II only

III only

I and II only

63.Which fiscal policy time lag is caused by the fact that GDP data are not immediately available?

decision lag

implementation lag

recognition lag

information lag

64.An advantage of demand-side fiscal policies is that they do not always require tradeoffs between price levels and output, while supply-side fiscal policies sometimes do.

True

False

65.Low interest rates are primarily responsible for the fact that the U.S. debt is relatively manageable.

False

True

67.For fiscal policy to be sustainable, the present value of all projected future revenues must equal the present value of projected future spending.

False

True

69.Externally held debt is public debt held by foreigners.

True

False

73.Reducing investment and expanding business regulation can increase aggregate supply.

True

False

75.When fiscal policy is used to correct short-run fluctuations in the business cycle, which type of spending is able to be changed more readily?

Neither discretionary nor mandatory spending can be changed.

discretionary spending

mandatory spending

Both discretionary and mandatory spending can be readily changed.