Definitions
A ______________________ is created each time the federal government spends more than it collects in taxes in a given year.
A. budget deficit
B. budget surplus
C. corporate tax
D. regressive tax
Budget Deficit
A government collects $35 billion quarterly in tax revenue. Each year it allocates $7.5 billion to the justice system and $14.5 billion for the administrative costs. What percentage of its total annual tax revenue is left for allocation to the remaining categories of government spending?
A. 84.29%
B. 15.71%
C. 62.85%
D. 37.15%
84.29%
If government tax policy requires Peter to pay $15,000 in tax on annual income of $200,000 and Paul to pay $10,000 in tax on annual income of $100,000, then the tax policy is:
A. regressive.
B. optional.
C. progressive.
D. proportional.
Regressive
A __________________________ policy will cause a greater share of income to be collected from those with high incomes than from those with lower incomes.
A. progressive tax
B. regressive tax
C. proportional tax
D. excise tax
Progressive Tax
If a country’s GDP decreases, but its debt increases during that year, then the country’s debt to GDP ratio for the year will _______________ in proportion to the magnitude of the changes.
A. Increase
B. increase or decrease
C. Decrease
D. decrease because GDP decreased
Increase
A ______________________ means that government spending and taxes are equal.
A. fiscal budget
B. balanced budget
C. contractionary fiscal policy
D. discretionary fiscal policy
Balanced Budget
A government annually allocates $5 billion of its total tax revenue to weather related disaster relief, $21 billion to healthcare and $11 billion to education. If the government's quarterly tax revenue is $33 billion, what percentage of its budget is allocated annually to healthcare?
A. 17.50%
B. 15.90%
C. 63.88
D. 25.00%
15.90%
Which of the following terms is used to describe the set of policies that relate to government spending, taxation, and borrowing?
A. financial policies
B. fiscal policies
C. monetary policies
D. economic policies
Fiscal Policies
7. A ________________________________ is calculated as a flat percentage of income earned, regardless of level of income.
A. progressive tax
B. proportional tax
C. estate and gift tax
D. regressive tax
Proportional Tax
If a country’s GDP increases, but its debt decreases during that year, then the country’s debt to GDP ratio for the year will _______________ in proportion to the magnitude of the changes.
A. increase or decrease
B. decrease
C. increase because GDP increased
D. decrease because its debt decreased
Decrease
A typical ____________________________ fiscal policy allows government to decrease the level of aggregate demand, through increases in taxes.
A. expansionary
B. discretionary
C. contractionary
D. standardized
Contractionary
A government collects $700 billion annually in tax revenue. Each year it allocates $70 billion to the justice system and $130 billion for its own administrative costs. What percentage of annual tax revenue is allocated to these two categories of government spending?
A. 37.15%
B. 27.58%
C. 28.57%
D. 17.51%
28.57%
When the government passes a new law that explicitly changes overall tax or spending
levels, it is enacting:
A. fiscal policies
B. progressive fiscal policy.
C. discretionary fiscal policy
D. regressive fiscal policy.
Discretionary Fiscal Policy
A tax based on corporate profits
A. Estate/Gift Tax
B. Regressive Tax
C. Corporate Income Tax
D. Proportional Tax
Corporate Income Tax
The time lag for monetary policy is typically ________________ the time lag for fiscal policy.
A. longer than
B. about the same as
C. shorter than
D. the same as
Shorter Than
the use of government spending and tax policy to influence the path of the economy over time.
A. Automatic Stabilizers
B. Budget Deficit
C. Regressive Tax
D. Fiscal Policy
Fiscal Policy
A government annually collects $460 billion in tax revenue and allocates $140 billion to military spending. What percentage of this government's budget is spent on its military?
A. 36.63%
B. 27.50%
C. 41.90%
D. 30.43%
30.43%
If government tax policy requires Jane to pay $50,000 in taxes on annual income of
$200,000 and Mary to pay $20,000 in tax on annual income of $100,000, then the tax policy is:
A. regressive.
B. proportional.
C. optional.
D. progressive.
Progressive
If individual income tax accounts for more total revenue than the payroll tax in the U.S., why would over half the households in the country pay more in payroll taxes than in income taxes?
A. income tax is a proportional tax
B. payroll tax is a regressive tax
C. payroll tax is a progressive tax
D. income tax is a progressive tax
income tax is a progressive tax
During a recession, if a government uses an expansionary fiscal policy to increase GDP, the:
A. aggregate supply curve will shift to the right.
B. aggregate supply curve will shift to the left.
C. aggregate demand curve will shift to the left.
D. aggregate demand curve will shift to the right.
aggregate demand curve will shift to the right
When the share of individual income tax collected by the government from people with higher incomes is smaller than the share of tax collected from people with lower incomes, then the tax is ____________________.
A. optional
B. proportional
C. progressive
D. regressive
Regressive
A government annually collects $160 billion in tax revenue and allocates $21 billion to
education spending. What percentage of this government's budget is spent on education?
A. 24.50%
B. 30.13%
C. 12.31%
D. 13.12%
13.12%
If government tax policy requires Bill to pay $40,000 in taxes on annual income of $200,000 and Paul to pay $20,000 in tax on annual income of $100,000, then the tax policy is:
A. regressive.
B. progressive.
C. optional.
D. proportional.
Proportional
If Canada's economy moves into an expansion while its economy is producing more than
potential GDP, then:
A. government spending and tax revenue will increase because of automatic stabilizers.
B. government spending and tax revenue will decrease because of automatic stabilizers.
C. automatic stabilizers will increase government spending and decrease tax revenue.
D. automatic stabilizers will decrease government spending and increase tax revenue.
automatic stabilizers will decrease government spending and increase tax revenue
_____________________ are a form of tax and spending rules that can affect aggregate demand in the economy without any additional change in legislation.
A. Standardized employment budgets
B. Automatic stabilizers
C. Budget expenditures
D. Discretionary fiscal policies
Discretionary Fiscal Policies