ECON 131 HW 17

At the beginning of 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 plants 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 $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

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%

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

Automatic stabilizers

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 suggests 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% of 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 spending and increase tax revenue

A ___________ means that government spending and taxes are equal.

balanced budget

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

budget surplus

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 changing overall tax or spending levels, it is enacting:

discretionary fiscal policy

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

expansionary

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

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 it 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

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

progressive tax

If government tax policy requires Peter to pay $15,000 in tax on annual income of $200,0000 and Paul to pay $10,000 in tax on annual income of $100,000, then the tax policy is:

regressive