27.1 Q&A

Which of the following are categories of federal government spending? The largest and fastest growing category of gov. expenditures is The federal gov. day to day activities include running federal agencies like the EPA, FBI and the ICE. Spending on these types of activities make up

1) All of the above 2) Transfer payments 3) Less than 10%

Briefly explain whether each of the following is an example of fiscal policy 1) The federal Government increases spending on rebuilding the New Jersey shore 2) The Fed sells treasury securities 3) The total the fed. government pays out for unemployment insurance decreases during expansion 4) The revenue the fed. Government collects from the individual income tax declines during a recession? 5) The fed. government changes the required gasoline mileage for new cars 6) Congress and the president enacts a temporary cut in payroll taxes.

1) a discretionary fiscal policy 2) not a fiscal policy 3) automated stabilizer 4) automated stabilizer 5) not a fiscal policy 6) a discretionary fiscal policy

What is the difference between federal purchases and federal expenditures? Are federal purchases higher today than they were in 1960? Are federal expenditures higher today than they were in 1960?

Federal purchases require that the government receives a good or service in return, whereas expenditures includes transfer payments. purchases decreased. expenditures increased

What is fiscal policy? Who is responsible for fiscal policy?

Fiscal policy can be described as changes in government spending and taxes to achieve macroeconomic policy objectives. The federal government controls fiscal policy.

Which of the following statements is most accurate regarding fiscal policy and monetary policy?

Fiscal policy includes changes in government spending and taxes and is controlled by the federal government. Monetary policy includes changes in the money supply and interests rates and is controlled by the Fed. Both policies are intended to achieve macroeconomic objectives.

What is the difference between federal Government purchases and expenditures?

Gov. purchases are included in expenditures.

From the discussion in this chapter, which source of government revenue is likely to increase the most in the future?

Individual income tax

Who are the baby boomers? Why should the retirement of the baby boomers cause a large increase on social security spending?

People born between WW II and 1965 there will be more individuals collecting social securities than curently

In 2009, congress and the president enacted "cash for clunkers" legislation, if they traded in an old, low gas-mileage, car. Was this piece of legislation an example of fiscal policy?

Yes, because the primary goal of the spending program was to simulate the national economy.

Changes in taxes and spending that happen without actions by the government are called If the government cuts taxes to increase aggregated demand, the action is called

automatic stabilizers a discretionary fiscal policy

Economists use the term fiscal policy to refer to changes in taxing and spending policies

only by the federal government

Since WW II, the federal government share of total government expenditures has been between

two thirds and three quarters