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Macro Econ Chap 12 > Chap 12 > Flashcards

Chap 12 Flashcards

1
Q

What is a deficit?

A

When the state spends more than it receives in taxes in 1 year.

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2
Q

What is the deficit equal to in terms of spending?

A

the amount of spending minus the amount of taxes

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3
Q

What is the federal debt?

A

The total amount the state owes.

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4
Q

How does the state spend more than it taxes?

A

by selling bonds to individuals, companies and other governments.

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5
Q

The federal deficit also equals

A

the bonds outstanding

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6
Q

What is the net public debt?

A

the portion of the debt that the government owes to others (not to itself)

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7
Q

What do politicians compare the new spending plan to?

A

The planned spending, not the old spending.

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8
Q

How do long do the spending plans typically plan for?

A

10 years

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9
Q

What is the CBO?

A

The Congressional Budget Office

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10
Q

What does the CBO do?

A

forecasts how new taxes and spending will affect the budget

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11
Q

What is static scoring?

A

it assumes individuals will not change their behavior with tax/spending changes

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12
Q

What is dynamic scoring?

A

looks at the past changes of behavior to forecast the effects of the legislation

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13
Q

What are two key words to pay attention to when studying taxes?

A

Rate and Income

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14
Q

How much does the U.S. currently spend per day?

A

10 billion

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15
Q

The Net Public Debt in comparison to GDP has increased since 2008 as spending rose due to…

A

2009 stimulus package, stimulus built into regular spending, 8% increases in ordinary spending and TARP funds spent/not repaid

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16
Q

Historically speaking U.S. spending was __% of GDP.

A

1-2%

17
Q

Spending in terms of GDP increased when…

A

Civil War and WWI

18
Q

Most of spending was ____ until the New Deal

A

military costs

19
Q

Post New Deal spending changed from military costs to…

A

socializing costs (spreading private costs to society) through taxes.

20
Q

What are three examples of programs that emerged through socializing costs?

A

Social Security, Unemployment insurance, Medicare/caid.

21
Q

Currently we spend __% on Social Security/Medicare/caid/Unemployment insurance/other welfare programs.

A

60%

22
Q

We spending ~ __% on national defense.

A

20%

23
Q

The interest component of spending is at 5%? Why is it so low?

A

Because the Fed has expanded the money supply

24
Q

What will happen when the Fed lowers the money supply?

A

the spending on interest will rise and cause a crisis

25
Q

What is the average Social Security retirement benefits per person? How many workers does it take to pay for one retiree, averaging at $400 a person?

A

$1200 per person. 3 people per retiree.

26
Q

What has caused Medicare costs to rise?

A

The socialization of medicine

27
Q

What is the estimated long term debt of SS/Mc/Md?

A

$110 trillion

28
Q

Why does the Fed. debt not equal the net public debt?

A

because the government owes itself money and net public debt doesn’t include that.

29
Q

What is our current years deficit?

A

$1 trillion

30
Q

What is Hauser’s Law?

A

no matter how high rates go, tax revenues will stay in that range. implies that we cannot balance our spending problems with tax increases, above a certain point

31
Q

What is a proportional tax?

A

the tax rate is at the same at all income levels

32
Q

What is a progressive tax?

A

the tax rate rises as income rises

33
Q

What is a regressive tax?

A

the tax rate rises as income falls

34
Q

The bottom 50% of workers are paying __% of taxes?

A

2%

35
Q

Is the total federal tax system proportional, progressive or regressive?

A

progressive

36
Q

According to Friedman if a leader can only pick one issue - spending, taxes or deficits- which should she choose?

A

Spending because it is so inefficient for one person to spend another’s income on a third person that it is better to lower spending than to lower deficits

Macro Econ Chap 12 (1 decks)

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