Question 1

An important consequence of foreign-held debt is the ________ of the supply of loanable funds in the United States,which helps keep interest rates ________.

Accepted Answer

Foreign-held debt increases the supply of loanable funds in the United States, which helps keep interest rates low.

Question 2

Why is it important to distinguish between deficits and debt?

Accepted Answer

The answer of Why is it important to distinguish between...

Question 3

Melanie is concerned with the growing national debt in her home country of Germany.Which true statement could you offer to help her form a more complete picture of the situation?

Accepted Answer

By comparing Germany's debt-to-GDP ratio with other wealthy, developed nations, Melanie can gain a more complete understanding of the situation. While Germany's debt may be a concern, it is important to keep in mind that it is not as high as some other nations.

Question 4

Why has so-called entitlement reform become such a major national issue?

Accepted Answer

The answer of Why has so-called entitlement reform become such...

Question 5

The failure to make required payments on a debt is known as

Accepted Answer

Defaulting refers to the failure to make required payments on a debt, leading to potential penalties and damage to one's credit score.

Question 6

What are the advantages and disadvantages of indexing Social Security benefits to the consumer price index (CPI)rather than to the average wage index?

Accepted Answer

The answer of What are the advantages and disadvantages of...

Question 7

Which is NOT a significant owner of U.S.debt?

Accepted Answer

Although Greece is a member of the European Union and a country with significant debt, it is not a significant holder of U.S. debt. The other options are all significant holders of U.S. debt, with China being the largest foreign holder.

Question 8

Why are marginal tax rates the most relevant to consider when making financial decisions?

Accepted Answer

The answer of Why are marginal tax rates the most...

Question 9

Strict budget regulations,aimed at debt reduction,are called

Accepted Answer

"Austerity" specifically refers to strict budget regulations aimed at debt reduction. "Belt-tightening" is a similar concept, but may be used more broadly to refer to any type of spending reduction. "Fiscal discipline" is a more general term that could include a variety of budgetary practices, not necessarily focused on debt reduction. "Surplus targeting" and "trend reversal" are not necessarily related to debt reduction.

Question 10

The U.S.national debt is purchased by entities in the form of

Accepted Answer

The U.S. national debt is sold in the form of treasury securities, which can be purchased by individuals, companies, and foreign governments. These securities are issued by the U.S. Treasury and come in several different forms, including treasury bills, treasury notes, and treasury bonds. They have different maturities and interest rates, and are considered to be one of the safest investments in the world because they are backed by the full faith and credit of the U.S. government.

Question 11

Prior to the 1980s,the top marginal tax rates in the United States were very high (i.e.,greater than 70 percent during the Great Depression and afterward).Why is it unlikely that tax rates will ever reach that level again?

Accepted Answer

The answer of Prior to the 1980s,the top marginal tax...

Question 12

According to the U.S.Treasury,as of 2013,about ________ of U.S.national debt was held ________.

Accepted Answer

As of 2013, approximately 67 percent of the U.S. national debt was held domestically, meaning by U.S. individuals, institutions, and government entities.

Question 13

Why may a budget deficit be considered undesirable?

Accepted Answer

The answer of Why may a budget deficit be considered...

Question 14

With the exception of the years 1998-2001,the textbook cites ________ as the only period in which the federal government came close to balancing the budget.

Accepted Answer

The period from 1960-1974 is noted for significant fiscal discipline and economic growth, which brought the federal budget closer to balance, unlike the other periods listed.

Question 15

One commonly proposed solution to the growing spending challenges faced by Social Security and Medicare is to increase payroll taxes.What are some potential downfalls associated with this solution? Explain.

Accepted Answer

The answer of One commonly proposed solution to the growing...

Question 16

Suppose you are hired by the Federal Reserve Bank of Chicago as a financial analyst and your starting salary is $75,000.Use the following table to calculate your total income tax burden.Show your work.

Accepted Answer

The answer of Suppose you are hired by the Federal...

Question 17

The number of workers per retiree is a common feature in discussions of how to improve the sustainability of the Social Security program.What was the approximate number of workers per retiree when Social Security was first instituted? What is that number today? Discuss the challenges this poses for the federal government budget.

Accepted Answer

The answer of The number of workers per retiree is...

Question 18

How is it possible for some people to pay "negative" taxes?

Accepted Answer

The answer of How is it possible for some people...

Question 19

Why is means-testing not likely to be a long-term solution for the rising costs associated with Medicare and Social Security benefits? Fully explain your answer.

Accepted Answer

The answer of Why is means-testing not likely to be...

Question 20

Which of the following is FALSE about the recent Greek debt crisis?

Accepted Answer

Economists do not generally agree that austerity has brought an end to Greece's economic problems. In fact, there is much debate about the effectiveness of austerity measures in Greece and their impact on the country's economy.

Quiz 28: Federal Budgets: the Tools of Fiscal Policy

An important consequence of foreign-held debt is the of the supply of loanable funds in the United States,which helps keep interest rates .