The government decides that it will cut taxes in an attempt to move the economy out of a severe recession. Productive function whereby the government promotes economic stability through fiscal policies Productive function whereby the government maintains market competition O Productive function whereby the government redistributes income from rich to poor Productive function whereby the government produces goods that are difficult for private markets to supply An entrepreneur incorporates a new business in the state of Delaware so that the firm can enter into a lease to use a factory and purchase raw materials. Redistributing income O Reallocating resources Enforcing contracts O Maintaining competition

The government decides that it will cut taxes in an attempt to move the economy out of a severe recession. Productive function whereby the government promotes economic stability through fiscal policies Productive function whereby the government maintains market competition O Productive function whereby the government redistributes income from rich to poor Productive function whereby the government produces goods that are difficult for private markets to supply An entrepreneur incorporates a new business in the state of Delaware so that the firm can enter into a lease to use a factory and purchase raw materials. Redistributing income O Reallocating resources Enforcing contracts O Maintaining competition

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter30: Government Budgets And Fiscal Policy

Section: Chapter Questions

Problem 9SCQ: True or False: Federal spending has grown substantially in recent decades. By world standards, the...

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9. Make a graph showing the spending and tax revenue of your state government for as many years as you can find (use the government of your home country if you are not from the United States). What trends do you notice? What spending categories make up the largest share of the state budget? What are the largest sources of revenue? e
5. Now assume that a recession ( triggered by a reduction of Aggregate Demand ) causes each of the five incomes to fall by 25 % . In other words , income is 75 % of what they used to be . Given the lower income , a ) what would be the total tax revenue paid by each of the five citizens ? b ) what is the total tax revenue for the small nation ?
3 Fiscal Policy Keynes recommended that when aggregate demand slumped causing a recession or depression in output and a loss of jobs, the government should step in to increase spending. (a) Following the collapse of systemically important banks in 2008, were the G-20 group of countries right in early 2009 to coordinate their fiscal policies and increase government spending? How would you distinguish the effect of such a policy on (i) confidence (ii) cut back in investment spending by companies (iii) averting a global meltdown or severe economic depression such as the 1930Ac€?c? (b)If you were in 2015 for one day the Minister of Finance in Italy, facing deflation, falling output, rising unemployment and a growing national debt relative to income what kind of fiscal polices would you pursue? Would you increase or cut government expenditures or raise taxes? Would you recommend structural reform in the labour market to complement your policies? Would you suggest, as all three of the…
The figure shows government expenditure and revenue as a percentage of GDP, 1990-2019. During which of the following periods did the federal government run a budget surplus? 27.0% 25.0% -Expenditures 23.0% 21.0% 19.0% Receipts 17.0% 15.0% YEAR O 1998-2001 None of these answers is correct. O 2003-2008 2012-2018 PERCENT OF GDP 0661 1991 1993 1994 9661 2661 6661 0007 2002 2003 2005 9007 2008 6007 2011 2012 2014 2015 2017 2018
2. Which of the following is not a category of fiscal policy? government policies regarding the purchase of goods and services government policies regarding taxation government policies regarding money supply in the economy government policies regarding transfer payments and welfare benefits
10) Fiscal policy is defined as changes in federal ________ and ________ to achieve macroeconomic objectives such as price stability, high rates of economic growth, and high employment. A) taxes; interest rates B) taxes; expenditures C) interest rates; money supply D) taxes; money supply
5 Which one of the following statements regarding fiscal policy and the budget is correct?(a) When the government plans to stimulate economic activity, it can increasespending or reduce taxes;(b) Revenue from tax is always greater than government spending in SouthAfrica;(c) Demand management only refers to fiscal policy;(d) A contractionary fiscal policy should be implemented to combatunemployment
(25) Which of the following is an example of fiscal policy? Select one: a. A change in tax rates. b. A change in the money supply. c. A change in interest rates. d. A change in the inflation rate. (26) If the number of employed persons in a country equals 24 million, the number of unemployed persons equals 8 million, and the number of persons over age 16 in the population equals 40 million, the unemployment rate equals ________. Select one: a. 25% b. 18% c. 32%
Suppose that the U.S. government decides to charge cola producers a tax. Before the tax, 30 billion cases of cola were sold every year at a price of $4 per case. After the tax, 23 billion cases of cola are sold every year; consumers pay $5 per case, and producers receive $2 per case (after paying the tax). The amount of the tax on a case of cola is $_________ per case. Of this amount, the burden that falls on consumers is $_________ per case, and the burden that falls on producers is $__________ per case. True or False: The effect of the tax on the quantity sold would have been smaller if the tax had been levied on consumers.
QUESTION 22 Refer to the table below. During which years did the country have a budget surplus? 2014 and 2016 2012 and 2013 2016 O 2015 Year Government expenditure (trillions of 2009 dollars) 0.75 0.80 0,87 0.95 1.06 2012 2013 2014 2015- 2016 Tax revenue (trillions of 2009 dollars) 0.80 0.83 0.86 0.95 1.02
2. Consider a hypothetical island with a consumer, a coconut farm, a coconut restaurant, and a government. The coconut farm produces 10 coconuts, which are sold at 2 dollars each. Of the 10 coconuts, 4 were sold to the consumer, and 6 to the restaurant. The restaurant bought 6 coconuts from the farm and 3 from the neighboring island. The restaurant made 9 coconut dinners from the coconuts, and sold them at 5 dollars each. 7 were sold domestically, and 2 were sold to the neighboring island. The consumer supplied labor to the farm, restaurant and the government, earning 5, 4 and 7.5 dollars, respectively. The consumer owns the farm and the restaurant and thus is entitled to their profits. The government collected 1.5, 3.0 and 1.5 dollar of tax, respectively, from the farm (corporate income tax), restaurant (corporate income tax) and the consumer (labor income tax). The government paid the consumer 2.5 dollars in bond interest. The government finances its budget deficit by issuing bonds…
5) Under the most recent stimulus package issued by the US federal government, the full payments were $1,400 per person for single taxpayers earning less than $75,000 and for couples earning less than $150,000. Suppose we consider another version of the stimulus program - the full payment would be $3,000 per person for single taxpayers earning less than $35,000 and for couples earning less than $70,000. Relative to the most recent stimulus package, how would this revised stimulus program impact the share of stimulus immediately spent and not saved? Would either the original program or the revised program have a lasting impact on the equality of income distribution in the US?