Government and Economy

Question 1

Progressive Tax

Answer 1

Higher rate on higher incomes

Question 2

Proportional Tax

Answer 2

(Flat Tax) Same rate for all taxpayers

Question 3

Regressive Tax

Answer 3

Larger rate on lower incomes

Question 4

Budget Deficit

Answer 4

Occurs when the government spends more than it brings in

Question 5

Discretionary Spending

Answer 5

About 1/3 of the national budget

Question 6

Mandatory Spending

Answer 6

About half of federal spending

Question 7

Budget Surplus

Answer 7

Occurs when the government takes in more than it spends

Question 8

National Debt

Answer 8

The National Debt of the United States is the amount owed by the federal government of the United States

Question 9

Deficit Spending

Answer 9

Practice of spending more than what is taken for a specific budget year

Question 10

What is the government doing when it issues bonds?

Answer 10

Federal Funds Rate(FFR) Rises

Question 11

What are public goods and services?

Answer 11

Provided by the government and consumed by the public as a whole

Question 12

What are four examples of deficit spending?

Answer 12

• National Emergencies
• Public Goods and Services
• Stabilization of the Economy
• Entitlements

Question 13

What is the difference between contractionary fiscal policy and expansionary fiscal policy?

Answer 13

• Expansion fiscal policy is when the government puts money out
• Contractionary fiscal policy is when the government takes money out

Question 14

Balanced Budget

Answer 14

Idea that a budget should never spend more money than it has received.

Question 15

Reserve Requirement Ratio

Answer 15

Ratio of reserves to deposits required of banks by the Federal Reserve

Question 16

Discount Rate

Answer 16

The rate of interest the Federal Reserve charges on loans to banks.

Question 17

What is the difference between the national debt and deficit spending?

Answer 17

◦National debt is the amount owed by the federal government of the United States.
◦Deficit Spending is practice of spending more than what is taken in for a specific budget year

Question 18

How can the government slow down the economy?

Answer 18

Using Contractionary Fiscal Policy

Question 19

How can the government expand the economy?

Answer 19

Using expansionary Fiscal policy

Question 20

What are examples of automatic stabilizers?

Answer 20

food stamps, unemployment, and progressive income taxes.

Question 21

What happens when monetary policy coordinates well with the business cycle?

Answer 21

The leaps in the cycle are more stable

Question 22

Expansionary Fiscal Policy

Answer 22

When the government increases government spending and decrease taxes to put money into the economy

Question 23

Contractionary Fiscal Policy

Answer 23

When the government cuts government spending and increase taxes to take money out of the economy