chapter 16 answers final Flashcards
why is government fiscal policy important
it affects the economy
which of the following acts of Congress would be unconstitutional?
a tax on automobile made in Michigan and exported to canada
which tax is withheld from employee paychecks
income tax
which are sources of non tax revenue for the federal government
canal tolls and fees for passports and copyrights
which is a reason why the federal government borrows money
to pay the costs of war
what would a believers in supply-side economics want to do?
strengthen private business
which must approve all borrowing by the federal government
Congress
which is an important criticism of the size of the public debt?
a huge debt will have to be paid by future taxpayers
which is the largest entitlement program today?
Social Security
Which federal budget items have controllable costs
spending on highways
who prepares the federal budget each year to preset to congress?
the president
What must congress do with the budget by october of each year to avoid having to pass an emergency spending bill>
get the budget approved by the president
What usually happens when the GDP increases at a steady rate?
the economy grows
which of the following is most likely to slow economic growth
higher taxes
what happens when the federal reserve lowers the discount rate
banks can lower their interest rates
which is the term for the amount of money that the federal reserve tells banks to keep on hand?
reserve requirement
why might Congress levy a tax for a purpose other than to raise money?
to discourage a harmful activity
which describes an excise tax?
a luxury tax
which is a source of non tax revenue?
interest charges of the federal reserve system
what occurs when the government’s income is not enough to cover the amount the it spends?
deficit
The New Deal programs of the Great depression were examples of which of the following?
demand-side economics
what limit does the constitution place on the amount of money the federal government may borrow each year
borrowing is unlimited
which of the following decides how much the federal government can spend each year?
Congress
Which describes the discount rate?
the interest rate banks pay when they borrow money from a federal reserve bank
which of he following is true of the federal government taxing power?
the government’s taxing power is limited by the constitution
which is a true statement about the federal individual income tax?
income tax rates are flexible
which are taxes levied on goods brought into the US?
Custom duties
why did the federal government have to borrow money in the 1930’s to finance a budget deficit?
so it could provide relief programs during an economic depression
why did president FDR increase federal government spending in the 1930’s based on the theories of John Maynard Keyes?
to increase employment
a supply side economist would most likely think that the federal government should do which of the following?
lower taxes to create a stronger economy
What is the name for the amount of money the federal government has borrowed over the years and not yet repaid?
the public debt
which of the following is an example of an entitlement?
food stamps
what is the name for the total amount of all goods and services produced in the country each year?
gross domestic product
last year, a basket of groceries cost 200$, this year he same basket costs 20 percent are; which of the following could explain the difference?
inflation
what happens when the federal reserve buys or sells government securities from or to banks
it affects money supply
a general increase in prices
inflation
a tax that is proportionate to income
progressive tax
pertains to the money supply and availability of credit
monetary policy
an absence of economic growth
recession
tax cuts rather than greater spending ultimately stimulate the economy
supply side economics
benefit that must be paid to all who are eligible
entitlement
a general decrease in prices
deflation
increased public spending reduces unemployment and increases tax revenues
demand-side economics
a fixed rate tax levied without regard to income
regressive tax
the government’s power to tax and spend to influence the economy
fiscal policy
