983 Social insurance programs are 981 982 984 985 All of the following are sources of federal tax revenue EXCEPT the personal income tax Incorrect sales taxes True Answer Correct social insurance taxes Incorrect the corporate profits tax Incorrect The federal government s largest source of tax revenue is property taxes Incorrect personal income and corporate profit taxes True Answer Correct sales taxes Incorrect social insurance taxes Incorrect government programs intended to protect families against economic hardships True Answer Correct private insurance policies to protect families from hardships caused by government actions Incorrect private insurance policies that cover gaps in government provided health care Incorrect programs to help unemployed people have a social life Incorrect Which of the following is a government transfer wages paid to U S senators Incorrect purchases of tanks for the army Incorrect Social Security payments to retired auto workers True Answer Correct payments to contractors for repairs on interstate highways Incorrect All of the following are sources of state and local tax revenue EXCEPT social insurance taxes True Answer Correct property taxes Incorrect 986 987 988 989 990 sales taxes Incorrect income taxes Incorrect Which of the following is NOT an example of government purchases of goods and services a federal prosecutor s salary in a lawsuit against Halliburton Incorrect new pavement for interstate highway I 95 Incorrect a surgeon s bill reimbursed under the Medicare program True Answer Correct equipping U S air marshals with electroshock weapons Incorrect Which of the following is NOT an example of government transfers Medicaid paid prescription drugs for low income individuals Incorrect unemployment insurance Incorrect a Social Security disability pension Incorrect a reimbursement of personal income tax withheld from wages True Answer Correct Government payments to households for which no good or service is provided in return are called transfer payments True Answer Correct government purchases Incorrect consumption expenditures Incorrect investment expenditures Incorrect Medicaid Medicare and Social Security are examples of unilateral payments Incorrect transfer payments True Answer Correct monetary policy Incorrect taxes Incorrect The largest source of federal tax revenues is property taxes Incorrect personal income taxes True Answer Correct corporate income taxes Incorrect sales taxes Incorrect Which of the following represents the largest source of tax revenue for the U S federal government personal income taxes True Answer Correct corporate profit taxes Incorrect sales taxes Incorrect social insurance taxes Incorrect Which of the following is not an example of a government transfer payment environmental protection programs True Answer Correct Social Security Incorrect Medicare Incorrect Medicaid Incorrect Spending for Medicare and Medicaid accounts for what percentage of federal spending 10 Incorrect 20 True Answer Correct 30 Incorrect 40 Incorrect In the basic equation of national income accounting the government directly controls and influences G C and I True Answer Correct T G and C Incorrect C X and M Incorrect I G and T Incorrect A change in taxes or a change in government transfers affects consumption through a change in autonomous consumption Incorrect the marginal propensity to save Incorrect disposable income True Answer Correct government spending Incorrect The basic equation of national income accounting is GDP C I G X IM When the government uses fiscal policy to make 991 992 993 994 995 996 changes to taxes and transfers this policy primarily affects IM Incorrect I Incorrect C True Answer Correct X Incorrect 997 998 999 1000 1001 Consumer spending will rise if government transfers rise True Answer Correct the government raises tax rates Incorrect government transfers fall Incorrect the government raises tax rates or government transfers fall Incorrect Consumer spending will fall if government transfers rise Incorrect the government raises tax rates True Answer Correct the government lowers tax rates Incorrect government transfers rise or tax rates are lowered Incorrect Which of the following is NOT a method of fiscal policy changing tax rates Incorrect government transfers Incorrect government purchases of goods and services Incorrect changes in the money supply True Answer Correct Suppose the economy is in a recessionary gap To move equilibrium aggregate output closer to the level of potential output the best fiscal policy option is to decrease government purchases Incorrect decrease taxes True Answer Correct decrease government transfers Incorrect increase real interest rates Incorrect If the current level of real GDP lies below potential GDP then an appropriate fiscal policy would be to which will shift the curve to the 1002 1003 increase government purchases AD left Incorrect increase transfer payments AS right Incorrect increase tax rates AD right Incorrect increase government purchases AD right True Answer Correct Suppose the economy is in an inflationary gap To move equilibrium aggregate output closer to the level of potential output the best fiscal policy option is to lower tax rates Incorrect decrease government purchases True Answer Correct increase the investment tax credit Incorrect lower the real interest rate Incorrect If the current level of real GDP lies above potential GDP then an appropriate fiscal policy would be to which will shift the AD curve to the decrease government purchases right Incorrect increase government purchases left Incorrect decrease government purchases left True Answer Correct raise tax rates right Incorrect 1004 Figure Short Run Equilibrium Reference Ref 28 1 Figure Short Run Equilibrium The accompanying graph shows the current short run equilibrium in the economy Appropriate fiscal policy action in this situation would be a decrease in transfer payments True Answer Correct an increase in government purchases Incorrect a decrease in tax rates Incorrect an increase in the investment tax credit Incorrect 1005 Figure Short Run Equilibrium Reference Ref 28 1 Figure Short Run Equilibrium The accompanying graph reflects a short run inflationary gap According to the labeling on the graph the size of the inflationary gap is equal to P2 P1 Incorrect Y1 YP True Answer Correct P2 P0 Incorrect P1 P0 Incorrect 1006 Figure Short Run Equilibrium Reference Ref 28 1 Figure Short Run Equilibrium If the
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