Chapter 15 Fiscal Policy

This principle says that only those that use the good or service should pay the tax

• Ability to Pay
• Fiscal
• Benefits
• Monetary

A transfer payment is when the government

• pays for trade with other countries
• buys something that get nothing in exchange for
• pays only for Medicare
• pays only for roads

This is a tax that where you pay more the more money you make

• regressive
• proportional
• progressive
• flat

Government budget comprises of

• government spending and income tax only
• government revenue and government expenditure
• transfer payment and government revenue 
• government spending and indirect tax

a plan to increase aggregate demand and stimulate the economy

• Contractionary Fiscal Policy
• Expansionary Fiscal Policy
• Contractionary Monetary Policy
• Expansionary Monetary Policy

What do Social Security taxes pay for?

• benefits to federal workers and military personnel
• benefits to those who are unemployed
• transportation and training expenses for low-income people
• benefits to older citizens, surviving family members of wage earners, and people with certain disabilities

An example of expansionary fiscal policy would be

• cutting taxes.
• cutting government spending.
• cutting production of consumer goods.
• cutting prices of consumer goods.

If the unemployment rate is rising and GDP is falling, the fiscal policy action that the federal government should MOST likely follow is 

• decreasing taxes.
• decreasing spending.
• decreasing the money supply.
• decreasing the reserve requirement.

Fixed expense

• expenses you have already committed to spending
• payment received for providing labor
• true
• false

A budget deficit occurs when...

• The government brings in more revenue than it spends for a given year
• The government spends more money than it brings in for a fiscal year