1
When a government decides to reduce its spending, it should:
1. Cut expenditure across the board (i.e., general cuts, by the same percentage).
2. Protect core spending programs and eliminate specific inefficient programs.
3. Cut social safety nets, which are wasteful and excessive in most countries.
4. Replace targeted transfers with generalized subsidies.
2. Protect core spending programs and eliminate specific inefficient programs.
There are a number of ways that governments can finance a fiscal deficit. Which one would most likely lead to the crowding out of the private sector?
1. Borrowing from the central bank
2. Borrowing from international financial institutions
3. Issuing domestic public debt
4. Accumulating public wage arrears
3. Issuing domestic public debt
What is the main idea behind the concept of Keynesian Macro-Stabilization?
1. Automatic stabilizers imply fiscal deficits which are sufficient to stabilize the economy in case of a big slump.
2. The government should build infrastructure to increase long-term growth.
3. Fiscal multipliers ensure that government revenue will always be greater than government spending.
4. There is a case to actively use fiscal policy when the economy falls largely below its potential, showing large spare capacity and high unemployment.
4. There is a case to actively use fiscal policy when the economy falls largely below its potential, showing large spare capacity and high unemployment.
What are the main reasons for large cross-country differences in the impact of fiscal stabilization?
1. Small automatic stabilizers in advanced countries and high debt in developing countries.
2. Large automatic stabilizers in advanced countries and limited fiscal space in developing countries.
3. High public debt in advanced countries and low debt in developing countries.
4. Activist fiscal policy in advanced and developing countries.
2. Large automatic stabilizers in advanced countries and limited fiscal space in developing countries.
The cyclically-adjusted fiscal balance captures fiscal policy indicators that are…
1. Related to the effects of the economic cycle on the budget
2. Not related to the effects of the economic cycle on the budget
3. Related to the effects of GDP growth on the budget
4. Not related to the effects of GDP growth on the budget
2. Not related to the effects of the economic cycle on the budget
Which of the following is NOT an example of an automatic stabilizer?
1. As the unemployment rate increases during an economic downturn, unemployment insurance payments increase.
2. In response to a recession, parliament enacts lower income tax rates and increased tax exemptions for married couples.
3. As people earn higher incomes during an economic expansion, they pay higher taxes owing to the progressive tax system.
4. Owing to a fall in the prices of agricultural goods on world markets, a Price Stabilization Fund makes increased payments to domestic farmers.
2. In response to a recession, parliament enacts lower income tax rates and increased tax exemptions for married couples.
Which one of the following statements best describes the Cyclically-adjusted Balance?
1. It is an estimate of the fiscal balance that would apply under current policies if the output gap were zero.
2. It is an estimate of the fiscal balance that would apply under current policies if the potential output were at its peak.
3. It is an estimate of the fiscal balance under Keynesian macro-stabilization policies to stabilize the economy.
4. It is an estimate of the fiscal balance that reflects economic upturns and downturns.
1. It is an estimate of the fiscal balance that would apply under current policies if the output gap were zero.
Which of the following would NOT increase the surplus on the current account (holding other things constant)?
1. A rise in domestic saving.
2. A rise in national income holding domestic absorption constant.
3. A rise in government infrastructure spending.
4. An increase in transfers from abroad.
3. A rise in government infrastructure spending.
How will a contractionary fiscal policy (e.g. higher tax rates) impact the current account balance?
1. It improves the current account
2. It worsens the current account
3. Ambiguous effect because of opposite direction of income and price effects
4. The direction of effect depends on level of dollarization
1. It improves the current account
Who of the famous Ukrainian figures lived for some time in Vienna (could be several options)?
1. Taras Shevchenko
2. Andriy Shevchenko
3. Ivan Franko
4. Lesya Ukrayinka
5. Serhiy Zhadan
4. Ivan Franko
5. Lesya Ukrayinka
Which of the following constitutes a structural reform policy?
1. Reducing the wage bill through a temporary hiring freeze
2. Reducing the policy interest rate to promote private investment
3. Reducing import tax rates to decrease consumer prices
4. Allowing foreign ownership of banks
4. Allowing foreign ownership of banks
Is there a short run and long run tradeoff in macroeconomic stabilization through sizable discretionary fiscal policy?
1. No, because short term macroeconomic stabilization would enhance long-term economic growth.
2. Yes, because expansionary fiscal policy to stabilize the economy in the short run increases fiscal deficits and debts, requiring larger financing in the future.
3. No, because the expansionary fiscal policy will be mostly financed by an increase in tax revenue during the economic recovery.
4. Yes, because large fiscal spending can send a signal to global investors that the country has weak fiscal discipline.
2. Yes, because expansionary fiscal policy to stabilize the economy in the short run increases fiscal deficits and debts, requiring larger financing in the future.
When an emerging market economy converges to the income level of advanced economies, what usually happens to its currency?
1. It remains at a substantially depreciated level in real terms to promote economic growth
2. It exhibits trend real appreciation vis-à-vis the currencies of advanced economies
3. It stays constant in real terms to support economic growth and stabilize inflation
4. It appreciates or depreciates in trend real terms over the long-run, depending on the exchange rate regime
2. It exhibits trend real appreciation vis-à-vis the currencies of advanced economies
Automatic stabilizers usually?
1. Increase tax receipts during recession
2. Increase expenditures durnig booms
3. Balance the budget
4. None of the above.
4. None of the above.
Who of the famous economists of the Austrian school of economics lived and taught in Lviv?
1. Friedrich Hayek
2. Ludwig von Mises
3. Joseph Schumpeter
4. Milton Friedman
5. Yuriy Gorodnichenko
2. Ludwig von Mises
In what university of Ukraine has the famous Austrian economist – author of creative destruction theory Joseph Schumpeter taught?
1. National University of Kyiv-Mohyla Academy
2. National University of Taras Shevchenko
3. Lviv national university of Ivan Franko
4. Chernivtsi national university
5. Kyiv School of Economics
4. Chernivtsi national university
What is Gender Budgeting or “Gender-Responsive” Budgeting?
1. A toolbox to ensure equal resource allocation between men and women in the budget
2. A process through which gender considerations are incorporated into the public financial management framework
3. A technical process that assesses gender implications in the annual budget and only involves the Ministry of Finance
4. A requirement to involve both men and women in planning and deciding the budget.
2. A process through which gender considerations are incorporated into the public financial management framework
At the chart below, which of the following best describes fiscal policy in LaLa Land during 2021-2022?
1. Contractionary and procyclical
2. Contractionary and countercyclical
3. Expansionary and procyclical
4. Expansionary and countercyclical
3. Expansionary and procyclical
How is the buoyancy of a tax defined?
1. The percentage change in actual revenues divided by the percentage change in the tax base.
2. The percentage change in actual revenues divided by the percentage change in real GDP.
3. The percentage change in actual revenues divided by the percentage change in inflation.
4. The percentage change in actual revenues divided by the current balance of the central government.
1. The percentage change in actual revenues divided by the percentage change in the tax base.
If the government deficit is 3% of GDP and private savings-investment gap is 2% of GDP, the current account balance is
1. -5% of GDP
2. +5% of GDP
3. -1% of GDP
4. +1% of GDP
3. -1% of GDP