Government and the Economy Online Practice

Which economic measures are influenced by fiscal policy?

employment and economic growth

Which type of tax is applied uniformly so that lower-income individuals are paying a higher percentage of their earnings on the tax compared to high-wage individuals?

regressive tax

Who sets the reserve requirements for banks that are members of the Federal Reserve?

Board of Governors

How does the amount of interest on the national debt vary each year?

Changes in the amount of debt and the interest rate on the debt

Explain whether state and federal governments have the same priorities in their budgets.

No, because state governments spend a greater percentage of their budget on public welfare and higher education than local governments.

Which statement best describes how property tax is collected?

Property tax is a proportional tax paid to a local government based on the assessed value of the property being taxed.

What are the results from a steady decrease in the national debt?

The amount spent on interest on the national debt decreases, allowing more to be spent on social programs.

Infer why a bank enters into a repurchase agreement with the Federal Reserve.

The bank needs a short-term inflow of cash to increase its reserves and liquidity.

What is the greatest anticipation of the Federal Open Market Committee meetings?

The decision regarding the target federal funds rate.

Describe how changes to the money supply affect the bank's ability to lend to customers.

A decrease in the money supply decreases the ability for assets and securities to be turned to cash. The liquidity in the markets decreases as a result and the bank has less ability to lend.

How does a deficit compare to a surplus in the federal government's budget?

A deficit is when the total expenses is greater than the total revenues. A surplus is when the total revenues is greater than the total expenses.

The federal government recently increased funding for infrastructure projects and Social Security benefits while reducing individual income tax rates. Explain the fiscal policy being used in this situation.

An expansionary fiscal policy is being used because the decrease in tax rates increase consumer spending and increased government spending helps stimulate the economy.