Chapter 30: Q.41 (page 742)
In a booming economy, is the federal government more likely to run surpluses or deficits? What are the various factors at play?
The federal government would run a surplus amid a growing economy.
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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.
What are the main categories of U.S. federal government taxes?
What is a potential problem with a temporary tax decrease designed to increase aggregate demand if people know that it is temporary?
What is the benefit of having state and local taxes on income instead of collecting all such taxes at the federal level?
What are some of the arguments for and against a requirement that the federal government budget be balanced every year?
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