Chapter 10
It can often take more than a year for researchers and policy makers to determine that an economy is moving out of a recession. That year is known as ____ lag
Recognition
The _____ lag is the time it takes for policymakers to confirm that the economy is trending in or out of recession.
Recognition
If Amanda has an income of 40,000 and disposable income of 30000 how much does she pay in taxes
$10,000 Amanda pays $10,000 in taxes. The amount is determined by subtracting disposable income from total income.
By how much did president Kennedy reduce the top income tax rate
20%
In 2015, interest payments on the national debt constituted about what percentage of the federal budget?
6% Interest costs on the national debt were about $223 billion in 2015, representing about 6% of the federal budget.
If a Chinese firm owns U.S. Treasury bonds, this debt is considered
Externally held debt
According to the Laffer curve, an increase in tax rates will lead to:
An increase, a decrease, or no change in tax revenue
What does it mean that the income tax is progressive
As income increases, the income tax rate increases
The part of national debt held by ____ constitutes a claim on government assets
Foreign governments
The _____ lag is the time it takes Congress and the administration to settle on a policy once a problem is recognized.
Decision
Which of the following would be viewed as a disadvantage associated with contractionary fiscal policy
Decreased employment
Reducing tax rates may result in all of the following, Except
Decreasing in aggregate supply because market prices are higher
President Kennedy and Reagan each implemented a policy of supply-side economics. What did this mainly entail?
Decreasing marginal tax rates
Which of the following approaches to federal finance essentially ignores the impact of the budget on the business cycle and focuses on fostering economic growth and stable prices while keeping the economy as close as possible to full employment?
Functional finance
Which of the following is a supply-side fiscal policy
Grants for basic research
About 80% of federal government revenue is 2015 came from
Individual income taxes and payroll taxes
Which of the following could be disadvantage of expansionary fiscal policy
Inflation
Which of these could be part of a supply-side fiscal policy to encourage long-run economic growth?
Investments in human capital
What is one of the weaknesses of fiscal policy directed at the supply side of the economy
It can take a long time to work
Suppose Congress enacts a new Medicare benefit and finances it by raising payroll taxes such that each year's additional outlay is matched by additional revenue. Would this be considered fiscally sustainable?
No, this is still a pay-as-you go plan, which shifts the burden to future generations
What is externally held debt
Public debt held by foreigners
Which of the following methods of government deficit finance is most likely to cause inflation
Selling bonds to the federal reserve
In 2015, more than 40% of federal government spending was on:
Social Security, Medicare, and Medicaid
Which of the following is considered a withdrawal that reduces the flow of spending
Taxes
Which of the following is not suggested by public choice analysis
The government is a benevolent actor looking out for the best interests of its citizens
Which of the following is a public choice theory issue
The impact of election incentives on politicians
The part of the national debt held by _____ constitutes a claim on government assets
The public
The total accumulation of past surpluses and deficits is called
The public debt
Which part of government finance is called monetized debt
The sale of bonds to the federal reserve
The amount by which annual tax revenues exceed government spending is called
The surplus
what is the recognition lag
The time it takes for policymakers to confirm that the economy is trending in or out of recession
What is the implementation lag
The time required to turn fiscal policy into law and eventually affect the economy
As baby boomers keep retiring in coming years, it is likely that fiscal imbalance will
Worsen
If an economy has moved into an inflationary spiral, which of the following fiscal policy actions might be taken
decreasing unemployment compensation
Economists at the federal reserve bank are busy calculating money supply estimations, which will indicate whether expansionary policy was successful. The time spent collecting this data and generating reports is the:
information lag
About how long is the information lag
one to six months