Econ 2302 Chapter 17

What do goods like gasoline, tobacco, and alcohol typically share in common? a. They are all subject to government excise taxes. b. A regressive tax is imposed on each of them. c. They are all subject to government fiscal taxes. d. A progressive tax is imposed on each of them.

a. They are all subject to government exercise taxes

The government can use _____________ in the form of ____________________ to increase the level of aggregate demand in the economy. a. an expansionary fiscal policy; an increase in government spending b. a contractionary fiscal policy; a reduction in taxes c. an expansionary fiscal policy; an increase in corporate taxes d. a contractionary fiscal policy; an increase in taxes

a. an expansionary fiscal policy; an increase in government spending

If the government for the state of Washington collects $65.8 billion in tax revenues in 2013 and total spending in the same year is $74.8 billion, the result will be a. a budget surplus. b. a budget deficit. c. an increase in excise tax. d. an increase in payroll tax.

b. a budget deficit

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 a. budget deficit. b. budget surplus. c. decrease in payroll tax. d. decrease in proportional taxes.

b. budget surplus

In 2020, Microsoft will pay corporate income tax to the federal government based on the company's __________________. a. optional tax rate b. corporate profits c. proportional tax rate d. excise profits

b. corporate profit

If a government reduces taxes in order to increase the level of aggregate demand, what type of fiscal policy is being used? a. standardized b. expansionary c. contractionary d. discretionary

b. expansionary

If a country's GDP decreases, but its debt increases during that year, then the country's debt to GDP ratio for the year will _______________ in proportion to the magnitude of the changes. a. decrease because GDP decreased b. decrease c. increase d. increase or decrease

c. increase

The time lag for monetary policy is typically ________________ the time lag for fiscal policy. a. about the same as B. longer than C. shorter than d. the same as

c. shorter than

A ______________________ means that government spending and taxes are equal. a. fiscal budget b. discretionary fiscal policy c. contractionary fiscal policy d. balanced budget

d. balanced budget

When the government passes a new law that explicitly changes overall tax or spending levels, it is enacting a. regressive fiscal policy. b. progressive fiscal policy. c. fiscal policy. d. discretionary fiscal policy.

d. discretionary fiscal policy

A ______________________ is created each time the federal government spends more than it collects in taxes in a given year. a. budget deficit b. regressive tax c. corporate tax d. budget surplus

a. budget deficit

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 ____________________________. a. expansionary fiscal policy; lead to a budget deficit b. contractionary fiscal policy; lead to a budget surplus c. discretionary fiscal policy; lead to a budget surplus d. contractionary fiscal policy; lead to a budget deficit

a. expansionary fiscal policy; lead to a budget deficit

If the economy is producing less than its potential GDP, _____________________ will show a larger deficit than the actual budget. a. the standardized employment budget b. the automatic stabilizers c. discretionary fiscal policy d. expansionary fiscal policy

a. the standardized employment budget

_____________________ are a form of tax and spending rules that can affect aggregate demand in the economy without any additional change in legislation. a. Budget expenditures b. Standardized employment budgets c. Automatic stabilizers d. Discretionary fiscal policies

c. automatic stabilizers

A typical ____________________________ fiscal policy allows government to decrease the level of aggregate demand, through increases in taxes. a. expansionary b. standardized c. contractionary d. discretionary

c. contactionary

Which of the following terms is used to describe the set of policies that relate to government spending, taxation, and borrowing? a. financial policies b. monetary policies c. economic policies d. fiscal policies

d. fiscal policies

If individual income tax accounts for more total revenue than the payroll tax in the U.S., why would over half the households in the country pay more in payroll taxes than in income taxes? a. income tax is a progressive tax b. payroll tax is a regressive tax c. income tax is a proportional tax d. payroll tax is a progressive tax

a. income tac is a progressive tax.

A __________________________ policy will cause a greater share of income to be collected from those with high incomes than from those with lower incomes. a. proportional tax b. regressive tax c. excise tax d. progressive tax

d. progressive tax

A ________________________________ is calculated as a flat percentage of income earned, regardless of level of income. a. estate and gift tax b. progressive tax c. regressive tax d. proportional tax

d. proportional tax

When the share of individual income tax collected by the government from people with higher incomes is smaller than the share of tax collected from people with lower incomes, then the tax is ____________________. a. proportional b. optional c. progressive d. regressive

d. regressive