Public Finance

A(n) _____ denotes the total level or amount of something at a particular point in time. A(n) ___ is the change to the stock of that something after a period of time.

stock; flow

Ignoring the states, ____ income taxes are progressive.

federal

The main source of income for local governments is ______ taxes.

property

A(n) _____ tax is one in which the average tax rate stays the same as income increases.

proportional

Daniel has an annual taxable income of $25,000 and pays $2,500 in income taxes. Julia has a taxable income of $45,000 and pays $4,500 in income taxes. This tax is ___. Multiple choice question.

proportional

Medicare taxes are an example of a:

proportional tax.

Consider the following statement: "A system where everyone pays the same percentage in taxes is fair." This person supports:

proportional taxes.

Revenue sources are different for federal, state, and local governments. (True or False)

true

Generally, the budget deficit is calculated and reported _____ and the national _____ is the accumulation of previous budget deficits and surpluses.

yearly; debt

In the circular flow model including the government, the government combines resources and goods and services and it supplies households and firms with ______ goods and services

public`

A(n) _____ tax is one in which the average tax rate decreases as income increases.

regressive

At the state government level, the main sources of income are:

sales and excise taxes. state individual and corporate income taxes.

In the circular flow model, households _____ resources and _____ products.

sell; buy

Interest on the national debt is a major expenditure for the federal government which indicates that the federal government:

spends more than it receives in revenue forcing it to borrow to finance its deficits.

Suppose that the government runs a budget deficit of $75 billion in year 1. Assume that the year began with a national debt of $0. In year 2 the government ran a budget surplus of $50 billion. In year 3, the government spent $200 billion more than it collected in taxes. The debt is $ ______ billion.

225

Most local governments receive financial support from the ____ and ____ governments.

Blank 1: federal Blank 2: state

A(n) _____ cost is associated with the interest payments made on the national debt.

Blank 1: opportunity

Which of the following is not an area of most federal spending?

Education

Sources of revenue are the same for federal, state, and local governments. Multiple choice question.

False

Ignoring the states, ______ income taxes are progressive.

Federal

The surplus and/or deficit is a(n) _____ because we measure the surplus or deficit at each fiscal year. National debt is a(n) _____ showing how much the government owes at a particular point in time.

Flow, Stock

Funds that firms pay for resources are costs to firms but they represent which of the following type of flow to households?

Income

State governments spend money on all of the following except:

National Defense

A(n) ______ denotes the total level or amount of something at a particular point in time. On the other hand, a(n) _____ is the change to the stock of that something over a period of time.

Stock, flow

______- payments and subsidies are payments the government makes to households and businesses that do not require an exchange of productive activity.

Transfer

_________ payments and subsidies are payments the government makes to households and businesses that do not require an exchange of productive activity.

Transfer

The average tax rate:

determines whether the tax imposed is regressive, progressive, or proportional.

In choosing which type of tax to use, a government takes into consideration many factors including:

discouraging or encouraging certain behavior.

An average tax rate equals the amount of tax paid _____ by income and multiplied by 100.

divided

The type of tax that is assessed is determined: Multiple choice question.

by using the average tax rate.

In the circular flow model, households sell resources to and buy products from:

firms

In the circular flow model, the market economy creates:

flows of goods and services resources and money.

Monetary payments in the form of net taxes flow to the _____ from the households and buisnesses.

government

The circular flow model shows how:

households and firms interact in two key markets.

To provide goods and services, the government needs sources of

income

When the government needs to borrow money, it ____ the demand for loanable funds in the economy.

increases, raises, increase

If the government had no national debt, it would not have to make _____ payments, and other things could be done with these funds.

interest

Most economists prefer measuring the deficit relative to GDP because:

it allows a comparison across time. it allows a comparison across countries.

The federal government finances its deficits via

loans

The main source of income for ____ government is property taxes.

local

A budget surplus occurs when a government receives _____ revenue than it spends in any given fiscal year.

more

A budget surplus occurs when a government receives ________ revenue than it spends in any given fiscal year.

more

An example of a public good provided by the government is:

national defense.

The circular flow model with the government uses _____ taxes because households and firms receive transfer payments and subsidies from the government.

net