Chapter 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, Norways government plans to spend 35 billion more than it will collect in tax revenues 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

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

10% of the size of the US GDP in 2009.

A government annually allocates $5 billion of its total tax revenue to weather related, disaster relief, $21 billion to healthcare and $11 billion to education. If the government's quarterly tax revenue is $33 billion, what percentage of its budget is allocated annually to healthcare?

15.90%

At the beginning of 2009, a government had a total debt of 540b 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

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

Automatic stabalizers

During a recession, if a government uses an expansionary fiscal policy to increase GDP the

aggregate demand curve will shift to the right

The government can use ___________ in the form of _____________ to increase the level of aggregate demand in the economy.

an expansionary fiscal policy; an increase in government spending

A consensus estimate based on a number of studies suggest that if there is an increase in budget deficits or a fall in budget surplus by 1% of GDP it will most likely cause which of the following

an increase of 0.5-1.0% in the long term interest rate.

If Canada's economy moves into an expansion while its economy is producing more than potential GDP then

automatic stabilizers will decrease government and increase tax revenue.

If the state of Washington's government collects $75 billion in tax revenues in 2013 and total spending in the same year is 74.8 billion the result will be a

budget surplus

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

discretionary fiscal policy

If a government reduces taxes in order to increase the level of aggregate demand, what type of fiscal policy is being used

expansionary

By June, 2010, the US government owed 13.6 trillion dollars __________________ that over time has remained unpaid

in accumulated government debt

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.

increases or decreases

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

If government tax policy requires Peter to pay $15,000 in tax 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

regressive

A ______________ means that government spending and taxes are equal

balanced budget

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

corporate profits

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

Which of the following terms is used to describe the set of policies that relate to government spending, taxation and borrowing?

fiscal policies