Exam 17: Macroeconomic Policy Debates

Recall the Application that questions if the United States can or should adopt a value-added tax (VAT) to answer the following question(s). The value-added tax is essentially a sales tax that is levied on each stage of production. Firms pay the value added tax on their sales and then receive a credit for value-added taxes paid by their suppliers. Unlike a sales tax, the value-added tax is embedded in the price of goods. -According to this Application, some conservatives worry that a value-added tax ________ and some liberals worry that a value-added tax ________.

If the Federal Reserve purchases newly issued government debt

If the Federal Reserve purchases newly issued government bonds, the government is said to be

President Obama's stimulus package in 2009 included

To measure the effect of debt in an economy, economists use a standard measure which involves the ________ relative to the GDP.

Recall the Application about why the U.S. federal government took over the debt of the state governments in the late 1700s to answer the following question(s). -According to this Application, when the states got into fiscal difficulties in the 1840s through overly ambitious infrastructure projects, the federal government

What government agency has the option to purchase government bonds issued by the U.S. Treasury?

What is one specific economic situation that a balanced budget amendment would create?

Capital gains are taxed at a different rate than income and this reduces revenues the government receives. All else equal, what would happen if capital gains taxes were eliminated?

Some economists object to having the Fed concentrate solely on price stability because it would

In 2009, approximately 52 percent of the U.S. public debt was held by

A large government debt increases the amount of capital in the economy and thereby increases future incomes and real wages.

After experiencing its first budget surplus in 30 years in 1998, for how many consecutive years following that did the budget remain in a surplus state?

Government debt ________ the amount of savings available to firms and thus ________ the amount of capital in the economy.

What does the U.S. Treasury issue to finance the deficit?

Explain the proposition known as Ricardian equivalence.

Taking some types of spending "off budget" means

As a result of the large surpluses following the Clinton Administration, what did President George W. Bush do in 2001, which reduced the surplus?

Capital gains are the profits earned by investors from the sale of stocks, bonds, real estate, or other assets.

A deficit is defined as