The social security tax is a tax placed on income generated from: employment. in

Question

The social security tax is a tax placed on income generated from:

employment.

investing.

consuming.

saving.

none of the above

Government budget deficits get smaller during expansions and get larger during contractions

Question 2 options:

because Congress enacts discretionary policies in expansions to slow the economy.

because of the effect of automatic stabilizers.

only if Congress passes a law changing the budget, otherwise the budget deficit stays the same from year-to-year regardless of the economy.

because Congress must balanced the budget each year.

President Bush's use of an income tax rebate with $600 checks being sent to most households in 2008 was a classic example of:

Question 3 options:

expansionary fiscal policy.

contractionary fiscal policy.

expansionary monetary policy.

contractionary monetary policy.

Increases in spending to fight a recessionary gap often occur too late. This is due to

Question 4 options:

U.S. law prohibiting the use of fiscal policy.

the reluctance of the U.S. government to run deficits.

time lags in implementing fiscal policy.

none of the above is correct

The budget balance is calculated as:

Question 5 options:

T - G - TR

T + G - TR

T - G + TR

T + G + TR

If government spending decreases and taxes increase:

Question 6 options:

the government deficit will get smaller and possibly become a surplus.

the government surplus will get smaller and possibly become a deficit.

the public debt will increase at a faster rate than it did before.

the public debt will be eliminated

Suppose that U.S. debt is $15 trillion dollars at the beginning of the fiscal year. During the fiscal year, the government spending and government transfers combined are $3 trillion and tax revenues equal $2.4 trillion. At the end of the fiscal year assuming the government does not create new money, the debt is:

Question 7 options:

$18.0 trillion.

$14.4 trillion.

$15.6 trillion

$15.0 trillion.

Social security is an example of a(n) _______________ transfer program. Monies paid this year to social security beneficiaries come from ________________.

Question 8 options:

intergenerational; previous taxes paid by those beneficiaries when they worked.

intragenerational; previous taxes paid by those beneficiaries when they worked.

intergenerational; taxes collected this year from current workers.

fiscal; taxes paid by current retirees in years past plus the accumulated interest.

A one billion dollar increase in government purchases will have a greater effect (multiplier is greater) on GDP than a one billion dollar decrease in taxes because

Question 9 options:

tax cuts increase the deficit; an increase in government purchases does not.

households generally maintain their level of saving even though taxes rise.

a tax cut is not all spent; instead part is saved.

there is no difference. They both have the same effect.

because Congress enacts discretionary policies in expansions to slow the economy.

because of the effect of automatic stabilizers.

only if Congress passes a law changing the budget, otherwise the budget deficit stays the same from year-to-year regardless of the economy.

because Congress must balanced the budget each year.

President Bush's use of an income tax rebate with $600 checks being sent to most households in 2008 was a classic example of:

Question 3 options:

expansionary fiscal policy.

contractionary fiscal policy.

expansionary monetary policy.

contractionary monetary policy.

Increases in spending to fight a recessionary gap often occur too late. This is due to

Question 4 options:

U.S. law prohibiting the use of fiscal policy.

the reluctance of the U.S. government to run deficits.

time lags in implementing fiscal policy.

none of the above is correct

The budget balance is calculated as:

Question 5 options:

T - G - TR

T + G - TR

T - G + TR

T + G + TR

If government spending decreases and taxes increase:

Question 6 options:

the government deficit will get smaller and possibly become a surplus.

the government surplus will get smaller and possibly become a deficit.

the public debt will increase at a faster rate than it did before.

the public debt will be eliminated

Suppose that U.S. debt is $15 trillion dollars at the beginning of the fiscal year. During the fiscal year, the government spending and government transfers combined are $3 trillion and tax revenues equal $2.4 trillion. At the end of the fiscal year assuming the government does not create new money, the debt is:

Question 7 options:

$18.0 trillion.

$14.4 trillion.

$15.6 trillion

$15.0 trillion.

Social security is an example of a(n) _______________ transfer program. Monies paid this year to social security beneficiaries come from ________________.

Question 8 options:

intergenerational; previous taxes paid by those beneficiaries when they worked.

intragenerational; previous taxes paid by those beneficiaries when they worked.

intergenerational; taxes collected this year from current workers.

fiscal; taxes paid by current retirees in years past plus the accumulated interest.

A one billion dollar increase in government purchases will have a greater effect (multiplier is greater) on GDP than a one billion dollar decrease in taxes because

Question 9 options:

tax cuts increase the deficit; an increase in government purchases does not.

households generally maintain their level of saving even though taxes rise.

a tax cut is not all spent; instead part is saved.

there is no difference. They both have the same effect.

Explanation / Answer

1. The social security tax is a tax placed on income generated from employment,because it is a tax levied on both employer and employee which is used to fund social security program.

2. Government budget deficits get smaller during expansions and get larger during contractions because of the effect of automatic stabilizers.

3. President Bush's use of an income tax rebate with $600 checks being sent to most households in 2008 was a classic example of expansionary fiscal policy.

4. Increases in spending to fight a recessionary gap often occur too late. This is due to time lags in implementing fiscal policy.

5. The budget balance is calculated as T - G - TR.

6. If government spending decreases and taxes increase then the government deficit will get smaller and possibly become a surplus.

7. Suppose that U.S. debt is $15 trillion dollars at the beginning of the fiscal year. During the fiscal year, the government spending and government transfers combined are $3 trillion and tax revenues equal $2.4 trillion. At the end of the fiscal year assuming the government does not create new money, the debt is [($15 + $3) - $2.4] = $15.6 trillion.

8. Social security is an example of a(n) intragenerational transfer program. Monies paid this year to social security beneficiaries come from previous taxes paid by those beneficiaries when they worked.

9. A one billion dollar increase in government purchases will have a greater effect (multiplier is greater) on GDP than a one billion dollar decrease in taxes because there is no difference. They both have the same effect.

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