Chapter 30: Q. 2 (page 741)
When governments run budget surpluses, what is done with the extra funds?
Surpluses are largely used by the government to lower the federal debt.
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True or False:
a. Federal spending has grown substantially in recent decades.
b. By world standards, the U.S. government controls a relatively large share of the U.S. economy.
c. A majority of the federal government's revenue Is collected through personal income taxes.
d. Education spending is slightly larger at the federal level than at the state and local level.
e. State and local government spending has not risen much in recent decades.
f. Defense spending is higher now than ever.
g. The share of the economy going to federal taxes has increased substantially over time.
h. Foreign aid is a large portion, although less than half, of federal spending.
i. Federal deficits have been very large for the last two decades.
j. The accumulated federal debt as a share of GDP is near an all-time high.
Why are expenditures such as crime prevention and education typically done at the state and local level rather than at the federal level?
What is the main reason for employing expansionary fiscal policy during a recession?
Is it possible for a nation to run budget deficits and still have its debt/GDP ratio fall? Explain your answer. Is it possible for a nation to run budget surpluses and still have its debt/GDP ratio rise? Explain your answer.
In a booming economy, is the federal government more likely to run surpluses or deficits? What are the various factors at play?
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