chapter 14/15
According to Keynesian economics, which sector of the economy could offset a decline in business spending?
government
In the Keynesian model, GDP = C + I + G + (X - M), "G" stands for
government
What do state governments spend the most on?
local governments
President Reagan tried to reduce government spending by _____.
lowering taxes
the condition in which the quantity supplied is equal to the quantity demanded
macroeconometricequilibrium
the total amount borrowed from investors to finance the government's deficit spending
national debt
Which of the following could be considered a synonym for FICA?
payroll tax
per person basis; total divided by population
per capita
that part of the economy made up of private individuals and businesses
private sector
Which of the following groups does supply-side policy target through stimulation?
producers
In discussing taxes, which is the opposite of regressive?
progressive
After intergovernmental revenue, the largest source of revenue for local governments is
property tax
Supply-side policies aim to _____.
reduce the government's role in the economy
Which of the following is an example of federal mandatory spending?
social security
In Keynes's view, a short-term budget deficit due to government spending or tax cuts is _____.
sometimes necessary to help stimulate the economy
Which is the primary source of revenue for the federal government?
taxes
Fiscal policy may involve ____.
taxing corporations
Higher-than-normal interest rates caused by heavy government borrowing hurts private borrowers through
the crowding-out effect
States receive most of their intergovernmental revenue funds from
the federal government
The equilibrium price is determined by ____.
the market
All but seven states—Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming—rely on the individual income tax for revenue.
true
The terms proportional, progressive, and regressive refer to
types of taxes
Which is a major revenue category for state governments?
contributions to employment retirement funds
How do production costs affect aggregate supply?
Aggregate supply increases when production costs decrease.
policies based on demand-side economics
Keynesian economics
the study of the economy as a whole
Macroeconomics
Which of the following describes the idea of the Laffer Curve as it is expressed mathematically?
The ratios show the relationship between federal income tax rates and revenue.
Only five states—Alaska, Delaware, Montana, New Hampshire, and Oregon—have a general sales tax.
false
Supply-side policies aim to grow the size of the federal government.
false
Which is an example of a natural monopoly?
a city water system
the total value of all goods and services demanded at different price levels
aggregate demand
the amount of output that would be produced at all possible price levels
aggregate supply
An effective tax is one that exhibits one or more of the following characteristics.
all of the above
The progressive income tax is an example of _____.
an automatic stabilizer
annual budget in which expenditures equal revenues
balanced budget
"Those who benefit from government goods and services should pay in proportion to the amount of benefits they receive." So states the
benefit principle
a promise to repay a certain amount of money
bond
Policies that make production more efficient are favored by ______.
both demand-siders and supply-siders
Which type of tax is levied on the sale of an asset held for 12 months or longer?
capital gains tax
program or benefit that uses established eligibility requirements to provide health, nutritional, or income supplements to individuals
entitlement
Which type of tax is levied on specific items or services, including gasoline and telephone services?
excise tax
A severe economic downturn results in ______.
falling prices
Strategies for achieving economic goals of economic growth, full employment, and price stability have remained the same over time.
false
Supply-side policies have proven that smaller government makes the economy more efficient.
false
