Chapter 10

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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


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