Exam 17: Macroeconomic Policy Debates

A key feature of consumption taxation is that you should:

When an individual in the US invests in a 401K, that person is taxed:

One effect of removing capital gains tax is that:

Are there any reasons why reducing the inflation rate to zero would be a bad policy for the Fed to pursue? Explain.

List the four options the federal government faces in regard to its budget surpluses.

The "flat tax" designed by Robert Hall and Alvin Rabushka feature:

Explain the arguments against monetary policy targeting only the inflation rate.

The sum of all past deficits is called:

Budget deficits can lead to inflation if:

List two arguments for the passage of a balanced budget amendment.

Recall Application 1, "New Methods to Measure the Long-Term Fiscal Imbalances for the United States," to answer the following questions: -Define the concept of fiscal imbalance, as developed by Gokhale and Smetters.

The existence of automatic stabilizers causes:

During recessions, automatic stabilizers work to reduce government expenditures and increase government revenues.

Which of the following contributed to the $455 billion budget deficit in 2008?

What is a consumption tax? Give two examples.

Recall Application 1, "New Methods to Measure the Long-Term Fiscal Imbalances for the United States," to answer the following questions: -According to the application, the term used for the "new measure" for the government's long term indebtedness is:

The decrease in investment caused by an increase in government borrowing is called:

Since a budget deficit places a burden on future generations, it can never be justified.

Recall Application 1, "New Methods to Measure the Long-Term Fiscal Imbalances for the United States," to answer the following questions: -According to the application, why do the federal budget deficit projections not fully portray the long run problems of the United States?

What happens to investment and interest rates if the government runs a budget deficit in a closed economy? Assume that the Ricardian Equivalence does not hold. Explain.