Fiscal policy
Spending on highway construction, the environment, or education is what type of spending?
Discretionary spending
Lowering interest rates makes borrowing more or less expensive?
LESS expensive
Benefits received
What is it called when the government spends more than it takes in?
Budget deficit
These vegetables are stored in vinegar and other spices in order to make pickles
Cucumbers
What type of Fiscal policy is used to slow down the economy and fight inflation?
Contractionary fiscal policy
Buying bonds is an example of what type of monetary policy?
Expansionary monetary policy
If I said that everyone pays 4.95% for income tax, then what type of tax would this be?
Proportional tax
Mandatory spending
What is the most widely eaten MEAT in the world?
Pork
What type of fiscal policy is needed and why?
Real GDP - 2.5%
CPI - 2%
Unemployment - 7.2%.
Expansionary- Unemployment is too high
All member banks must hold a percent of their reserves with the Fed. What is this called? What percent do they hold?
Reserve Requirement Ratio (RRR)
10%
A sales tax is an example of what type of tax?
Regressive tax
The interest rate that the banks charge when it lends money to other banks for short-term (overnight) loans is the
Federal Funds Rate (FFR)
What is the HOTTEST pepper in the world?
Carolina Reaper or Chili Pepper X
If the government wants expansionary fiscal policy, what should it do to taxes and spending?
Decrease taxes, Increase spending
Unemployment went up from 4.3% to 7.1% over the last 3 months. What monetary policy is needed and what will happen to the RRR, DR, FFR, and OMO
Expansionary. RRR Decrease, DR Decrease, FFR Decrease. OMO- Buy bonds
What type of tax is the majority of the revenue that the federal government collects?
Individual income taxes
Fiscal policy features like public transfer programs and a progressive income taxes that work to stabilize the economy. What is this called?
Automatic stabilizers
What are the two national dishes of Germany?
schnitzel and sauerkraut
What are the four limitations to Fiscal policy? (Can get partial credit)
Policy lags
Timing issues
Rational expectations theory
Political/Regional issues
List FOUR Contractionary tools the Federal Reserve can do and what would happen to each
Increase Reserve requirement
Sell bonds
Increase discount rate
Increase Federal funds rate
Income Tax Rate
$0 - $10,000 0%
$10,001 - $40,000 10%
$40,001 - $90,000 20%
$90,001 and above 30%
The tax described in the table to the above is what type of tax?
Progressive income tax
Buying and selling of US securities (bonds.) Most often used tool by the Fed.
Open Market Operations (OMO)
A turtle candy is commonly made out of which three ingredients
Carmel, Chocolate, Pecans