Econ Test 3
Card Set Information
Econ Test 3
After 1970, the share of federal spending allocated to national defense:
Which of the following countries had the highest level of government expenditures as a share of GDP?
Total government spending sums to approximately
40% of US economy
Measured as a share of the economy, government expenditures:
rose from less than 10% in 1929 to nearly 35% percent in 2009
The income security program category for federal government outlays includes spending for
all of these
How does total taxes as a percentage of GDP in the US compare to those of western european countries, such as the UK, Germany, and Sweden?
US taxation is smaller
When the tax structure of a nation is progressive, as income increase, the tax rate
"It would be an undue hardship to require people whose income is below 15,000 per year to pay income taxes." this statement reflects which of the following principles for a tax?
"He who pays a tax should receive the benefit from the expenditure financed by the tax." this statement reflects which of the following principles for a tax?
fairness of contribution
Which of the following answers best reflects the ability-to-pay philosophy of taxation?
progressive income tax
Which of the following is an example of a progressive tax?
the federal personal income tax
A tax is regressive if it collects a:
smaller fraction of income as income rises
Which of the following can be classified as a regressive tax?
federal gasoline tax
A tax is proportional if, as a persons income rises, the:
amount of the tax is constant
In exhibit 12-2, we can tell that the tax shown here is:
Suppose a person with an income of 20,000 pays a tax of 2,000. It the tax is progressive, then how large of a tax will a person with an income of 40,000 pay?
more than 4,000
Which of the following US taxes is the most consistent with the ability-to-pay principle?
the federal income tax
People who often create benefits for the minority and impose the cost on the majority are called:
The choice of a voter to remain uninformed because the marginal cost of obtaining information is greater than the marginal benefit from obtaining knowledge is called:
Who is recognized as the founder of public choice theory?
According to the shortsightedness effect, politicians tend to favor projects with:
short-run benefits and long-run costs
If congress fails to pass a budget before the fiscal year starts, then federal agencies may continue to operate only if congress has passed a:
If the fiscal year begins without a budget and congress fails to pass continuing resolution, then:
the federal government shuts down
Between 1998 and 2001, the federal budget was
Which of the following is true?
a budget deficit will ^ with national debt
When the US federal government runs a budget deficit, it borrows money by selling:
treasury bills, notes and bonds
Indebtedness of the federal government in the form of outstanding interest-earing government security
If the federal government has a budget surplus, then the national debt is
Which of the following is true about the current US national debt?
is over 12.0 trillion
Currently, the national debt is approximately
60% of GDP
When measured as a percentage of GDP, the US national debt reached its highest levels as a result of
World War II
Which of the following countries has the largest national debt as a percentage of GDP?
In recent years, net interest on the national debt paid by the federal government as a percentage of GDP is equal to approximately
External debt is that portion of the national debt
held by foreigners
Which of the following owns the largest proportion of the national debt?
federal, state, and local govern and federal reserve
Currently, how much of the US national debt is owned to foreigners?
In terms of productions possibilities curve, the benefits of trade between two nations are that each nation moves to a higher
consumption possibility combination
Opening trade between two nations would
leave production possibility unchanged and ^ consumption possibility
In exhibit 18-1, the production possibilities curve of wheat and corn for Nabia and Pada are presented. In Nabia the cost of producing one more unit of wheat is equal to
1/4 units of corn
In exhibit 18-1, the production possibilities curves of wheat and corn for Nabia and Pada are presented. In Nabia the cost of producing one more unit of corn is equal to
4 units of wheat
In exhibit 18-1, the production possibilities curve of wheat and corn for Nabia and Pada are presented. In Pada the cost of producing one more unit of corn is equal to
3 units of wheat
In exhibit 18-1, the production possibilities curve of wheat and corn for Nabia and Pada are presented. In Pada the cost of producing one more unit of wheat is equal to
1/3 unit of corn
Comparative advantage indicates that
a nation can gain from trade even when it is an absolute disadvantage in producing all goods