Chapter 17: Government Budgets and Fiscal Policy

Which of the following is the percentage of annual US government spending allocated to foreign aid?

1%

What do goods like gasoline, tobacco, and alcohol typically share in common?

They are all subject to government excise taxes.

The federal government levies _____________________________ on people who pass assets ____________________________, either after death or during life.

an estate and gift tax; to the next generation

_____________________ are a form of tax and spending rules that can affect aggregate demand in the economy without any additional change in legislation.

automatic stabilizers

A ______________________ means that government spending and taxes are equal.

balanced budget

A ______________________ is created each time the federal government spends more than it collects in taxes in a given year.

budget deficit

A typical ____________________________ fiscal policy allows government to decrease the level of aggregate demand, through increases in taxes.

contractionary

When the government passes a new law that explicitly changes overall tax or spending levels, it is enacting:

discretionary fiscal policy.

If a government reduces taxes in order to increase the level of aggregate demand, what type of fiscal policy is being used?

expansionary

Which of the following terms is used to describe the set of policies that relate to government spending, taxation, and borrowing?

fiscal policies

By June, 2010, the U.S. government owed $13.6 trillion dollars ________________ that, over time, has remained unpaid.

in accumulated government debt

If a country's GDP increases, but its debt also increases during that year, then the country's debt to GDP ratio for the year will _______________ in proportion to the magnitude of the changes.

increase or decrease

A __________________________ policy will cause a greater share of income to be collected from those with high incomes than from those with lower incomes.

progressive tax

A ________________________________ is calculated as a flat percentage of income earned, regardless of level of income.

proportional tax

If South Dakota's governor reports a budget surplus in 2011, that state government likely:

received more in taxes than it spent in that year.

When the share of individual income tax collected by the government from people with higher incomes is smaller than the share of tax collected from people with lower incomes, then the tax is

regressive

The time lag for monetary policy is typically ________________ the time lag for fiscal policy.

shorter than

If the government for the state of Washington collects $65.8 billion in tax revenues in 2013 and total spending in the same year is $74.8 billion, the result will be:

a budget deficit

A regressive tax is imposed on each of them. If the state of Washington's government collects $75 billion in tax revenues in 2013 and total spending in the same year is $74.8 billion, the result will be a:

budget surplus

In 2019, Microsoft will pay corporate income tax to the federal government based on the company's

corporate profits