ECON CH 17

A typical ____________________________ fiscal policy allows government to decrease the level of aggregate demand, through increases in taxes. a/expansionary b/discretionary c/contractionary d/standardized

c/contractionary

By June, 2010, the U.S. government owed $13.6 trillion dollars ________________ that, over time, has remained unpaid. a/from decreases in income tax b/from decreases in corporate tax c/in accumulated government debt d/from decreases in excise tax

c/in accumulated government debt

A government annually collects $230 billion in tax revenue and allocates $70 billion to military spending. What percentage of this government's budget is spent on its military? a/30.43% b/27.50% c/41.90% d/36.63%

a/30.43%

Which of the following is the percentage of annual US government spending allocated to foreign aid? a/21% b/17% c/10% d/1%

d/1%

If government tax policy requires Bill to pay $20,000 in taxes on annual income of $200,000 and Paul to pay $10,000 in tax on annual income of $100,000, then the tax policy is: a/proportional. b/progressive. c/regressive. d/optional.

a/proportional.

The time lag for monetary policy is typically ________________ the time lag for fiscal policy. a/shorter than b/the same as c/longer than d/about the same as

a/shorter than

If the economy is producing less than its potential GDP, _____________________ will show a larger deficit than the actual budget. a/the standardized employment budget b/discretionary fiscal policy c/the automatic stabilizers d/expansionary fiscal policy

a/the standardized employment budget

What do goods like gasoline, tobacco, and alcohol typically share in common? a/They are all subject to government excise taxes. b/They are all subject to government fiscal taxes. c/A progressive tax is imposed on each of them. d/A regressive tax is imposed on each of them.

a/They are all subject to government excise taxes.

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/a budget deficit. b/an increase in excise tax. c/an increase in payroll tax. d/a budget surplus.

a/a budget deficit.

During a recession, if a government uses an expansionary fiscal policy to increase GDP, the: a/aggregate demand curve will shift to the right. b/aggregate supply curve will shift to the left. c/aggregate demand curve will shift to the left. d/aggregate supply curve will shift to the right.

a/aggregate demand curve will shift to the right.

A consensus estimate based on a number of studies suggests that if there is an increase in budget deficits (or a fall in budget surplus) by 1% of GDP, it will most likely cause which of the following? a/an increase of 0.5-1.0% in the long-term interest rate b/long and variable time lags in enacting the fiscal policy c/smaller impact due to temporary fiscal policy d/output above the potential GDP output level

a/an increase of 0.5-1.0% in the long-term interest rate

If Canada's economy moves into an expansion while its economy is producing more than potential GDP, then: a/automatic stabilizers will decrease government spending and increase tax revenue. b/government spending and tax revenue will decrease because of automatic stabilizers. c/government spending and tax revenue will increase because of automatic stabilizers. d/automatic stabilizers will increase government spending and decrease tax revenue.

a/automatic stabilizers will decrease government spending and increase tax revenue.

If Canada's economy moves into an expansion while its economy is producing more than potential GDP, then: a/automatic stabilizers will decrease government spending and increase tax revenue. b/government spending and tax revenue will increase because of automatic stabilizers. c/automatic stabilizers will increase government spending and decrease tax revenue. d/government spending and tax revenue will decrease because of automatic stabilizers.

a/automatic stabilizers will decrease government spending and increase tax revenue.

Which of the following terms is used to describe the set of policies that relate to government spending, taxation, and borrowing? a/fiscal policies b/monetary policies c/financial policies d/economic policies

a/fiscal policies

If individual income tax accounts for more total revenue than the payroll tax in the U.S., why would over half the households in the country pay more in payroll taxes than in income taxes? a/income tax is a progressive tax b/payroll tax is a regressive tax c/payroll tax is a progressive tax d/income tax is a proportional tax

a/income tax is a progressive tax

If a country's GDP decreases, but its debt increases during that year, then the country's debt to GDP ratio for the year will _______________ in proportion to the magnitude of the changes. a/increase b/increase or decrease c/decrease because GDP decreased d/decrease

a/increase

When increasing oil prices cause aggregate supply to shift to the left, then: a/unemployment and inflation increase. b/You Answered unemployment decreases and inflation increases. c/unemployment increases and inflation decreases. d/unemployment and inflation decrease.

a/unemployment and inflation increase.

A government annually allocates $5 billion of its total tax revenue to weather related disaster relief, $21 billion to healthcare and $11 billion to education. If the government's quarterly tax revenue is $33 billion, what percentage of its budget is allocated annually to healthcare? a/25.00% b/15.90% c/63.63% d/17.50%

b/15.90%

If an economy moves into a recession, causing that country to produce less than potential GDP, then: a/tax revenue and government spending will be lower because of automatic stabilizers. b/automatic stabilizers will cause tax revenue to decrease and government spending to increase. c/tax revenue and government spending will be higher because of automatic stabilizers. d/automatic stabilizers will cause tax revenue to increase and government spending to decrease.

b/automatic stabilizers will cause tax revenue to decrease and government spending to increase.

Assume that laws have been passed that require the federal government to run a balanced budget. During a recession, the government will want to implement _____________________, but may be unable to do so because such a policy would ____________________________. a/contractionary fiscal policy; lead to a budget surplus b/expansionary fiscal policy; lead to a budget deficit c/contractionary fiscal policy; lead to a budget deficit d/discretionary fiscal policy; lead to a budget surplus

b/expansionary fiscal policy; lead to a budget deficit

A __________________________ policy will cause a greater share of income to be collected from those with high incomes than from those with lower incomes. a/excise tax b/progressive tax c/proportional tax d/regressive tax

b/progressive tax

If government tax policy requires Jane to pay $25,000 in taxes on annual income of $200,000 and Mary to pay $10,000 in tax on annual income of $100,000, then the tax policy is: a/optional. b/progressive. c/proportional. d/regressive.

b/progressive.

When increasing oil prices cause aggregate supply to shift to the left, then: a/unemployment decreases and inflation increases. b/unemployment and inflation increase. c/unemployment increases and inflation decreases. d/unemployment and inflation decrease.

b/unemployment and inflation increase.

The federal government levies _____________________________ on people who pass assets ____________________________, either after death or during life. a/an excise tax; to their children b/a progressive tax; to non-family members c/an estate and gift tax; to the next generation d/a regressive tax; to non-family members

c/an estate and gift tax; to the next generation

The government can use _____________ in the form of ____________________ to increase the level of aggregate demand in the economy. a/a contractionary fiscal policy; an increase in taxes b/an expansionary fiscal policy; an increase in corporate taxes c/an expansionary fiscal policy; an increase in government spending d/a contractionary fiscal policy; a reduction in taxes

c/an expansionary fiscal policy; an increase in government spending

A ______________________ is created each time the federal government spends more than it collects in taxes in a given year. a/regressive tax b/budget surplus c/budget deficit corporate tax

c/budget deficit

A typical ____________________________ fiscal policy allows government to decrease the level of aggregate demand, through increases in taxes. a/standardized b/discretionary c/contractionary d/expansionary

c/contractionary

When the government passes a new law that explicitly changes overall tax or spending levels, it is enacting: a/fiscal policy. b/regressive fiscal policy. c/discretionary fiscal policy. d/progressive fiscal policy.

c/discretionary fiscal policy.

Which of the following terms is used to describe the set of policies that relate to government spending, taxation, and borrowing? a/economic policies b/financial policies c/fiscal policies d/monetary policies

c/fiscal policies

The current level of US government accumulated debt, when measured in nominal dollars: a/is lower than it has ever been. b/has reached higher levels in the past. c/is higher than it has ever been. d/has remained steady for the past decade.

c/is higher than it has ever been.

A ________________________________ is calculated as a flat percentage of income earned, regardless of level of income. a/regressive tax b/progressive tax c/proportional tax d/estate and gift tax

c/proportional tax

If government tax policy requires Bill to pay $20,000 in taxes on annual income of $200,000 and Paul to pay $10,000 in tax on annual income of $100,000, then the tax policy is: a/regressive. b/optional. c/proportional. d/progressive.

c/proportional.

A government collects $70 billion quarterly in tax revenue. Each year it allocates $15 billion to the justice system and $29 billion for the administrative costs. What percentage of its total annual tax revenue is left for allocation to the remaining categories of government spending? a/15.71% b/62.85% c/37.15% d/84.29%

d/84.29%

A ______________________ means that government spending and taxes are equal. a/discretionary fiscal policy b/fiscal budget c/contractionary fiscal policy d/balanced budget

d/balanced budget

By June, 2010, the U.S. government owed $13.6 trillion dollars ________________ that, over time, has remained unpaid. a/from decreases in corporate tax b/from decreases in excise tax c/from decreases in income tax d/in accumulated government debt

d/in accumulated government debt

If a country's GDP increases, but its debt decreases during that year, then the country's debt to GDP ratio for the year will _______________ in proportion to the magnitude of the changes. a/decrease because its debt decreased b/increase because GDP increased c/decrease d/increase or decrease

d/increase or decrease

A ________________________________ is calculated as a flat percentage of income earned, regardless of level of income. a/progressive tax b/estate and gift tax c/regressive tax d/proportional tax

d/proportional tax

When inflation begins to climb to unacceptable levels in the economy, the government should: a/use contractionary fiscal policy to shift aggregate demand to the left. b/use expansionary fiscal policy to shift aggregate demand to the left. c/use expansionary fiscal policy to shift aggregate demand to the right. d/use contractionary fiscal policy to shift aggregate demand to the right.

d/use contractionary fiscal policy to shift aggregate demand to the right.