Ch 17

At the beginning 2010, the government of Norway had no debt and held $180 billion dollars in its sovereign fund. To stimulate its economy during 2011, Norway's government plans to spend $35 billion more than it will collect in tax revenue and in 2012, its spending will exceed tax revenues by $25 billion. What will the total government debt equal at the end of 2012?

$0

At the beginning of 2009, a government had a total debt of $540 billion dollars. It ended 2009 with a $6 billion dollar budget surplus. In 2010, its budget surplus reached $8 billion dollars. What is the total debt of the government equal to at the end of 2010?

$540 billion

Which of the following is the percentage of annual US government spending allocated to foreign aid?

1%

In 2009, the U.S. government spent $1.4 trillion more than it collected in taxes. This deficit was about

10% of the size of the U.S. GDP in 2009.

A government collects $600 billion annually in tax revenue. Each year it allocates $35 billion to healthcare and $50 billion for education. What percentage of annual tax revenue is allocated to these two categories of government spending?

14.16%

A government annually collects $230 billion in tax revenue and allocates $70 billion to military spending. What percentage of this government's budget is spent on its military?

30.43%

A government collects $70 billion quarterly in tax revenue. Each year it allocates $15 billion to the justice system and $29 billion for the administrative costs. What percentage of its total annual tax revenue is left for allocation to the remaining categories of government spending?

84.29%

_____________________ are a form of tax and spending rules that can affect aggregate demand in the economy without any additional change in legislation.

Automatic stabilizers

A ______________________ means that government spending and taxes are equal.

balanced budget

A typical ____________________________ fiscal policy allows government to decrease the level of aggregate demand, through increases in taxes

contractionary

"In 2010, Microsoft will pay corporate income tax to the federal government based on the company's __________________."

corporate profits

When the government passes a new law that explicitly changes overall tax or spending levels, it is enacting

discretionary fiscal policy.

Assume that laws have been passed that require the federal government to run a balanced budget. During a recession, the government will want to implement _____________________, but may be unable to do so because such a policy would ____________________________

expansionary fiscal policy; lead to a budget deficit

By June, 2010, the U.S. government owed $13.6 trillion dollars ________________ that, over time, has remained unpaid

in accumulated government debt

"If individual income tax accounts for more total revenue than the payroll tax in the U.S., why would over half the households in the country pay more in payroll taxes than in income taxes?"

income tax is a progressive tax

"If a country s GDP decreases, but its debt increases during that year, then the country s debt to GDP ratio for the year will _______________ in proportion to the magnitude of the changes."

increase

"If a country s GDP increases, but its debt decreases during that year, then the country s debt to GDP ratio for the year will _______________ in proportion to the magnitude of the changes."

increase or decrease

if a country s GDP increases, but its debt also increases during that year, then the country s debt to GDP ratio for the year will _______________ in proportion to the magnitude of the changes

increase or decrease

Currently, the US government accumulated debt to GDP ratio

is lower than its historical high point.

A __________________________ policy will cause a greater share of income to be collected from those with high incomes than from those with lower incomes.

progressive tax

A ________________________________ is calculated as a flat percentage of income earned, regardless of level of income.

proportional tax

If South Dakota's governor reports a budget surplus in 2011, that state government likely

received more in taxes than it spent in that year.

"When the share of individual income tax collected by the government from people with higher incomes is smaller than the share of tax collected from people with lower incomes, then the tax is ____________________."

regressive

"If an economy moves into a recession, causing that country to produce less than potential GDP, then:"

automatic stabilizers will cause tax revenue to decrease and government spending to increase.

If government tax policy requires Bill to pay $20,000 in taxes on annual income of $200,000 and Paul to pay $10,000 in tax on annual income of $100,000, then the tax policy is

proportional.