chapter 16 answers final

Question 1

why is government fiscal policy important

Answer 1

it affects the economy

Question 2

which of the following acts of Congress would be unconstitutional?

Answer 2

a tax on automobile made in Michigan and exported to canada

Question 3

which tax is withheld from employee paychecks

Answer 3

income tax

Question 4

which are sources of non tax revenue for the federal government

Answer 4

canal tolls and fees for passports and copyrights

Question 5

which is a reason why the federal government borrows money

Answer 5

to pay the costs of war

Question 6

what would a believers in supply-side economics want to do?

Answer 6

strengthen private business

Question 7

which must approve all borrowing by the federal government

Answer 7

Congress

Question 8

which is an important criticism of the size of the public debt?

Answer 8

a huge debt will have to be paid by future taxpayers

Question 9

which is the largest entitlement program today?

Answer 9

Social Security

Question 10

Which federal budget items have controllable costs

Answer 10

spending on highways

Question 11

who prepares the federal budget each year to preset to congress?

Answer 11

the president

Question 12

What must congress do with the budget by october of each year to avoid having to pass an emergency spending bill>

Answer 12

get the budget approved by the president

Question 13

What usually happens when the GDP increases at a steady rate?

Answer 13

the economy grows

Question 14

which of the following is most likely to slow economic growth

Answer 14

higher taxes

Question 15

what happens when the federal reserve lowers the discount rate

Answer 15

banks can lower their interest rates

Question 16

which is the term for the amount of money that the federal reserve tells banks to keep on hand?

Answer 16

reserve requirement

Question 17

why might Congress levy a tax for a purpose other than to raise money?

Answer 17

to discourage a harmful activity

Question 18

which describes an excise tax?

Answer 18

a luxury tax

Question 19

which is a source of non tax revenue?

Answer 19

interest charges of the federal reserve system

Question 20

what occurs when the government’s income is not enough to cover the amount the it spends?

Answer 20

deficit

Question 21

The New Deal programs of the Great depression were examples of which of the following?

Answer 21

demand-side economics

Question 22

what limit does the constitution place on the amount of money the federal government may borrow each year

Answer 22

borrowing is unlimited

Question 23

which of the following decides how much the federal government can spend each year?

Answer 23

Congress

Question 24

Which describes the discount rate?

Answer 24

the interest rate banks pay when they borrow money from a federal reserve bank

Question 25

which of he following is true of the federal government taxing power?

Answer 25

the government’s taxing power is limited by the constitution

Question 26

which is a true statement about the federal individual income tax?

Answer 26

income tax rates are flexible

Question 27

which are taxes levied on goods brought into the US?

Answer 27

Custom duties

Question 28

why did the federal government have to borrow money in the 1930’s to finance a budget deficit?

Answer 28

so it could provide relief programs during an economic depression

Question 29

why did president FDR increase federal government spending in the 1930’s based on the theories of John Maynard Keyes?

Answer 29

to increase employment

Question 30

a supply side economist would most likely think that the federal government should do which of the following?

Answer 30

lower taxes to create a stronger economy

Question 31

What is the name for the amount of money the federal government has borrowed over the years and not yet repaid?

Answer 31

the public debt

Question 32

which of the following is an example of an entitlement?

Answer 32

food stamps

Question 33

what is the name for the total amount of all goods and services produced in the country each year?

Answer 33

gross domestic product

Question 34

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?

Answer 34

inflation

Question 35

what happens when the federal reserve buys or sells government securities from or to banks

Answer 35

it affects money supply

Question 36

a general increase in prices

Answer 36

inflation

Question 37

a tax that is proportionate to income

Answer 37

progressive tax

Question 38

pertains to the money supply and availability of credit

Answer 38

monetary policy

Question 39

an absence of economic growth

Answer 39

recession

Question 40

tax cuts rather than greater spending ultimately stimulate the economy

Answer 40

supply side economics

Question 41

benefit that must be paid to all who are eligible

Answer 41

entitlement

Question 42

a general decrease in prices

Answer 42

deflation

Question 43

increased public spending reduces unemployment and increases tax revenues

Answer 43

demand-side economics

Question 44

a fixed rate tax levied without regard to income

Answer 44

regressive tax

Question 45

the government’s power to tax and spend to influence the economy

Answer 45

fiscal policy