Fiscal Policy

Fiscal Policy

​more misconceptions....

Multiple Select

What are the tools of fiscal policy? Select more than one.

• federal spending

• taxation

• open market operations

• reserve ratio

• borrowing

Dropdown

Productive government spending is good for the economy.​

Select answer

Open Ended

When is it appropriate for the government to spend more money than it makes? (run a deficit)

Dropdown

Trade deficits are always bad for the economy.​

Select answer

Open Ended

Explain how the government uses these tools to fix a recession or a downward turn in the economy.

Match

Match the spending category with its correct description or example.

• Defense and Security

• Infrastructure

• Social Programs

• Subsidies and grants

• Debt Interest

Military, homeland security

transportation systems, airports, etc

Education, food assistance, etc

support specific industries, businesses

fund the government debt obligations

• Military, homeland security

• transportation systems, airports, etc

• Education, food assistance, etc

• support specific industries, businesses

• fund the government debt obligations

Open Ended

If you were in charge of the federal budget, which category would you increase funding for? Which would you reduce? Explain your reasoning.

Open Ended

Explain how public trust in the U.S. government supports the stability of the tax system and, by extension, democracy itself. What potential risks arise when citizens lose trust in the government (e.g., disillusionment, political apathy, social unrest), and how could this shift impact civic engagement and the broader political system? Use historical or current examples to support your argument.

Multiple Select

What are some advantages to the VAT tax? Select more than one.

• It is a income based tax.

• It has a evenly distributed burden.

• It simplifies income tax filing.

• It is a consumption based tax.

• It takes a lot of money to collect.

Multiple Choice

The USA uses a ....

• Progressive income tax system

• Proportional Income tax system

• Regressive income tax system

A marginal tax system is a tax structure where income is divided into segments, or brackets, and each segment is taxed at a specific rate. Instead of taxing all of a person’s income at a single rate, only the income that falls within each bracket is taxed at that bracket's rate.

As income increases and moves into higher brackets, only the additional income above each threshold is taxed at the higher rate—not the entire income.

Multiple Choice

What do the income tax systems in Canada, the United States, and the United Kingdom have in common?

• All three countries use a flat tax rate for all income levels.

• They each use a progressive tax system with different brackets and rates.

• Each country has only three income tax brackets.

Multiple Choice

Which country mentioned has the highest top federal income tax rate?

• United States

• Canada

• United Kingdom

• All three have the same top rate

Multiple Choice

Why is the aging population in countries like the United States and the United Kingdom a threat to the sustainability of Social Security and similar programs?

• Older populations tend to pay higher taxes, increasing government expenses.

• There are fewer workers per retiree, leading to reduced funding for Social Security.

• Retirees no longer contribute to the economy in any meaningful way.

• Governments stop collecting taxes from retirees altogether.

Multiple Choice

In 1940, there were 42 workers per retiree in the United States. Today, that number has fallen to around two workers per retiree. What is the most significant impact of this change?

• More people are entering the workforce.

• The tax burden on current workers has decreased.

• It creates financial pressure on Social Security systems, risking insolvency.

• Retirees are receiving larger Social Security payments.

Multiple Choice

What broader lesson can other countries learn from Japan’s fiscal experiments in managing aging populations?

• Avoid government spending during times of economic hardship.

• Increase retirement benefits regardless of demographic shifts.

• Strategic government intervention can stabilize economies but carries long-term risks like growing national debt.

• Completely privatize all entitlement programs to reduce government debt.

Multiple Choice

Given the strain on Social Security systems due to aging populations, which of the following could be a viable solution to ensure long-term sustainability?

• Lowering the retirement age to increase Social Security payouts sooner.

• Increasing payroll taxes and/or raising the retirement age.

• Eliminating Social Security altogether.

• Freezing all pension benefits at current levels permanently.

Multiple Choice

What is fiscal policy?

• Changes in interest rates and money supply

• Government decisions about taxation and spending

• Stock market regulations

Multiple Choice

Who is primarily responsible for creating fiscal policy in the United States?

• The Federal Reserve

• Congress and the President

• The Supreme Court

Multiple Choice

Which of the following is an example of expansionary fiscal policy?

• Raising taxes and cutting government spending

• Lowering interest rates

• Increasing government spending and cutting taxes

Open Ended

Imagine the economy is experiencing high inflation. What fiscal policy tools could the government use to address this problem? Explain your answer.