Chapter 15 Macroeconomics
You have been hired as an economic advisor for a politician running for national office. The politician, at a recent campaign event, said that corporations are paying too much in taxes and are funding most of the federal government's operations. When you speak to the politician after the event, what would you say?
"We have a great deal of work to do. On the news tonight I predict there will be an expert correcting you and questioning why anyone would vote for you. Individuals, through income tax and social insurance taxes, provide the bulk of government revenue."
Which of the following is true regarding the nature of a progressive income tax system?
A person with higher income pays more tax dollars than someone with a lower income
If the government reduces the retirement age from 67 to 65, what effect will this have on government entitlement programs like Social Security?
It will increase the government's burden from entitlement programs
Which of the following statements about Medicare and Social Security is true?
Medicare and Social Security represent a mandatory outlay
Which of the following is true regarding the U.S. government's budget?
Over the years, the percentages of mandatory spending in total outlays has increased, while that of discretionary spending has decreased
Which of the following would be considered a transfer payment by the government?
The government helps senior citizens cover their monthly expenses with a cash payment
Which of the following statements are true about deficits versus debt?
The sum of all deficits equal the debt
Suppose that over the past 50 years, the nominal and real deficit of a country grew from $100 billion to $200 billion. Suppose that, over the same time, real GDP grew from $100 billion to $300 billion. Using __________, we can give an accurate picture of what happened in the country and conclude that the country is __________.
deficit-to-GDP ratio ; better off
The fear about Social Security is that
in several years, there will not be enough funds to cover 100 percent of promised benefits
Which of the following would help to fix Social Security problems?
increase the retirement age
The Vietnam War and the Great Society in the 1960s caused government outlays to _______ in the last half of the decade, and the 2001 tax cuts and the War on Terror caused the deficit as a percentage of GDP to _______.
increase;increase
Which of the following is included in government outlays?
interest payments on U.S treasury bonds
Discretionary spending by the government is spending that
is under the direct control of congress
Over the next 20 years, an increasing number of baby boomers are expected to retire. Which of the U.S. government's budget categories is likely to be most affected due to this trend?
mandatory
Entitlement programs such as Social Security and Medicare are primarily funded with
payroll
The _____ is the sum of past _____.
public debt; budget deficits
During the _________ phase of the business cycle, government expenditures tend to ____ and tax revenue tends to fall.
recessionary;rise
Which of the following represents a mandatory government outlay?
rental assistance payments made to those who are poor
Which of the following is the second largest source of tax revenue for the U.S. government?
social insurance tax
The government is said to have a budget surplus when
tax exceed outlays
