Macro Home work #1
Households and firms receive public goods and services in exchange for the net ___ they pay.
tax
Suppose that the government runs a budget deficit of $75 billion in year 1. Assume that the year began with a national debt of $25 billion. In year 2 the government ran a budget surplus of $50 billion. In year 3, the government spent $100 billion more than it collected in taxes. The debt is $___
150 billion.
Monetary payments in the form of ___ taxes flow to the government from households and businesses.
net
The government uses the revenue from ___ taxes to make monetary payments or expenditures in the resource and product markets.
net
Medicare taxes are an example of a:
proportional tax.
If the demand for loanable funds increases, interest rates ___ which can have big effects on consumers.
rise
At the state government level, the main sources of income are:
-state individual and corporate income taxes. -sales and excise taxes.
Suppose that tax revenue is $400 billion and that government spending is $450 billion. The budget is:
in deficit.
Budget deficits are calculated and reported on ___ basis.
annual
The type of tax (progressive, regressive, or proportional) is determined by using the ___ tax rate.
average
___ tax rate equals the amount of tax paid divided by income and multiplied by 100.
average
The government budget may be in
balance; deficit; surplus
The type of tax that is assessed is determined:
by using the average tax rate.
An opportunity cost is associated with the interest payments made on the national ___ .
debt
If the government had no national ___ it would not have to make interest payments, and other things could be done with these funds.
debt
The average tax rate:
determines whether the tax imposed is regressive, progressive, or proportional.
An average tax rate equals the amount of tax paid ___ by income and multiplied by 100.
divided
Monetary payments in the form of net taxes flow to the ___ from households and businesses.
government
Transfer payments and subsidies are payments the ___ makes to households and businesses that do not require an exchange of productive activity.
government
When the government needs to borrow money, it ___ the demand for loanable funds in the economy.
increases
An opportunity cost is associated with the ___ payments made on the national debt.
interest
A budget surplus occurs when a government receives ___ revenue than it spends in any given fiscal year.
more
Daniel has an annual taxable income of $25,000 and pays $2,500 in income taxes. Julia has a taxable income of $45,000 and pays $4,500 in income taxes. This tax is ___.
proportional
Federal income taxes are
progressive
___ tax is one in which the average tax rate stays the same as income increases.
proportional
Daniel has an annual taxable income of $25,000 and pays $2,500 a year in income taxes. Julia earns $45,000 in taxable income a year and pays $5,000 in income taxes. This tax is:
progressive.
At the federal government level, which of the following are the main sources of income?
-Individual and corporate income taxes -Excise taxes -Payroll taxes
Sources of revenue are the same for federal, state, and local governments.
F
Most economists prefer measuring the deficit relative to _______ because it places the deficit in better context and allows a comparison across time or across governments from different countries.
GDP
State governments spend money on all of the following except:
National Defense
