Pre-Test Chapter 30 (Fiscal Policy, Deficits, and Debt)

Refer to the above diagram which tax system has the

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12. Refer to the above diagram. Which tax system has the most built-in stability? A. T 4 B. T 3 C. T 2 D. T 1
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13. Refer to the above data. If a lump-sum tax (the same tax amount at each level of GDP) of $40 is imposed in this economy, the tax system: 14. When current government expenditures exceed current tax revenues and the economy is achieving full employment: 15. Refer to the above data for a fictional economy. The changes in the budget conditions between 1998 and 1999 best reflect:
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16. If the full-employment GDP for the above economy is at L , the: A. actual budget will have a deficit. B. standardized budget will have a deficit. C. actual budget will have a surplus. D. standardized budget will have a surplus. 17. Refer to the above diagram where T is tax revenues and G is government expenditures. All figures are in billions of dollars. If the full-employment GDP and actual GDP are each $400 billion, this economy will realize a: 18. If monies added to, or subtracted from, the Social Security trust fund were excluded from Federal budget calculations, the current Federal budget: 19. The tax cut passed by Congress and the Bush administration in 2001 was motivated primarily by: (1) The composite index of leading indicators turns downward for three consecutive months, suggesting the possibility of a recession; (2) Economists reach agreement that the economy is moving into a recession; (3) A tax cut is proposed in Congress; (4) The tax cut is passed by Congress and signed by the President; (5) Consumption spending begins to rise, aggregate demand increases, and the economy begins to recover.
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