When the federal budget is used as a tool for economic stabilization, the ideal

Question

When the federal budget is used as a tool for economic stabilization, the ideal goal is to
a. balance the budget over the entire business cycle
b. balance the budget each year
c. balance the budget during expansions
d. run a surplus during contractions

In using taxes as a tool for the redistribution of income and wealth in the U.S. economy, the government
a. taxes households with higher incomes at higher rates
b. uses tax revenues to provide services used to a greater extent by households with lower incomes
c. uses tax revenues to make transfer payments to households with lower incomes
d. all of the above

When the government uses tax revenue to pay off portions of the national debt, total purchasing power in the economy
a. increases
b. decreases
c. is not affected at any level
d. remains the same but changes individually


Which of the following taxes is not collected from the consumer on the final sale of goods and services?
a. consumption tax
b. national sales tax
c. value-added tax
d. flat tax

The Bretton Woods system
a. put the world on a gold standard
b. put the world on a system of fixed exchange rates
c. put the world on a system of floating exchange rates
d. established the system of balance-of-payments accounts

Explanation / Answer

a. balance the budget over the entire business cycle c. uses tax revenues to make transfer payments to households with lower incomes b. decreases d. flat tax c. put the world on a system of floating exchange rates

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