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5 Written questions

5 Matching questions

  1. Average Tax Rate
  2. Cost of Living Adjustments
  3. Balanced Budget
  4. Dividends
  5. GDP Gap
  1. a total tax paid divided by total (taxable) income, as a percentage
  2. b An automatic increase in the wages of workers or payments received to adjust for the impact of inflation
  3. c profits distributed to stockholders on a per-share basis
  4. d measures loss in output due to cyclical unemployment
  5. e a situation in which the government's spending is exactly equal to the total taxes and other revenues it collects during a given period of time

5 Multiple choice questions

  1. Budget philosophy calling for budget deficits during recessions to be financed by budget surpluses during expansions
  2. A decline in the economy's total output lasting at least two consecutive quarters or 6 months (An economic Contraction)
  3. a tax corporation pays on its profits. Third largest contributer of government revenue.
  4. The incorrect assumption that one event causes another because the two events tend to occur together.
  5. A decrease in government purchases, increase in net taxes, or some combination of the two aimed at reducing aggregate demand enough to return the economy to potential output without worsening inflation

5 True/False questions

  1. Proportional TaxA legal entity whose liability is limited to the value of their stock


  2. Money MultiplierThe multiple at which the money supply increases as a result in an increase in fresh reserves in the banking system


  3. Social Security SystemThe interest rate that banks pay to the Fed when banks need to borrow from the Fed. This is known as a penalty for violating the required reserve ratio


  4. Fiscal DragWhen taxes increase, welfare and unemployment compensation decrease in response to an economic expansion. This lessens the increase in disposable income


  5. Wealth of NationsThis is the 18th century book written by Scottish economist Adam Smith in which he spells out the first modern account of free market economies.


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