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When you buy a United States Savings Bond, you

loan money to the government

The Office of Management and Budget

is responsible for deciding how much money each government agency receives in the budget

What does "lender or last resort" mean with respect to the Federal Reserve

it will lend money to a bank in a financial emergency

Who generally bears most of a sales tax when the demand for the good is inelastic?

the consumer

An example of expansionary fiscal policy would be

cutting taxes

All of the following are reasons why it is difficult to put balanced fiscal policy into practice EXCEPT

the need for discretionary policy

What is an entitlement

a social welfare program providing benefits to people who meet certain elegibility requirements

What was one reason the US gov't started the Federal Reserve system?

To provide consumers with access to funds for business expansion

An example of constrictionary fiscal policy would be

decreasing government spending

Supporters of supply-side economics believe that

taxes have a strong negative influence on economic output

When revenues exceed expenditures

there is a budget surplus

What type of policy does the Federal Reserve use to counteract an expansion causing high intrest rates?

tight money policy

Why does the bank sometimes hold excess reserves?

to be sure they can meet their customers' demands

How quickly can an increase in gov't spending increase the GDP?

6 months

The national debt rose during Ronald Reagan's term as president for all of the following reasons EXCEPT

the costs of running a war

All of the following people are well known classical economists EXCEPT

Arthur Laffer

Which is the major source of tax revenue for local governments?

property taxes

Which of the following is one way the Federal Reserve Bank serves the government?

selling government securities

What do taxes collected under the FICA fund?

Social Security and Medicare

An example of an automatic stabilizer is


The federal budget is put together

by Congress and the White House

What do Social Security taxes pay for?

benefits to older citizen, surviving family memebers of wage earners, and people with certain disabilities

Which of the following defines a means-tested program?

Eligibility depends on income

What is a major difference between an operating budget and a capital budget?

an operating budget is for day-to-day expenses; a capital budget is for investment spending

Every hour, the federal gov't spends

$200 million

All of teh following are problems associated with high national debt except that it

makes investing through treausry bonds, notes, and bills very risky

How many federal reserve districts are there


All of the following are characteristics of classical economics EXCEPT

a significant role for gov't in running the economy

the purpose of the expansionary fiscal policy is to

increase output

Why does the Federal Reserve alter monetary policy?

to lessen the effect of natural business cycles

Keynesian economics failed to deal with

the Great Depression

Which of the following is one reason teh federal gov't collects income taxes as a person earns

so that the gov't can pay bills as they come due

An accurate statement about achieving a balanced budget would be that

most states require a balanced budget for state spending

What is the cost of money

the price of the intrest rate

What type of policy does the Fed use to counteract a contraction

easy money policy

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