Chapter 30: Q.19 (page 742)
How would a balanced budget amendment change the effect of automatic stabilizer programs?
Programs where the amount of spending is unfixed would lose flexibility due to increased taxes and reduced spendings.
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The social security tax is on employees’ income earned below . Is this tax progressive, regressive
or proportional?
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.
What is a potential problem with a temporary tax decrease designed to increase aggregate demand if people know that it is temporary?
Explain how automatic stabilizers work, both on the taxation side and on the spending side, first in a situation where the economy is producing less than potential GDP and then in a situation where the economy is producing more than potential GDP.
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.
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