Download Study Guide 14-16

Economics
Study Guide
Chapter 14, 15, and 16
Questions:
1. What does FICA do?
2. What do Social Security taxes pay for? (be specific)
3. For what reasons does government collect income tax?
4. What is an entitlement?
5. List, describe and give examples of the 3 types of taxes.
6. Why is the sales tax a bigger burden on lower incomes than higher incomes?
7. What is discretionary spending? Give an example.
8. What is a tax on gasoline called?
9. What type of spending is Social Security?
10. What happens to tax withholdings from your paycheck?
11. What type of taxes fund schools?
12. Explain expansionary fiscal policy and its purpose. Give an example.
13. Why is balanced fiscal policy difficult?
14. Describe the difference between classical and Keynesian economic theory.
15. What do we call it when revenues exceed expenditures?
16. In effect, you do what when you buy a government savings bond?
17. Explain the Classical economic theory and how it failed to deal with what event in
our nation’s history?
18. Why did the national debt rise in the Reagan administration?
19. Explain contractionary fiscal policy. Give an example.
20. What is the purpose of expansionary fiscal policy?
21. What are the limitations of Fiscal Policy?
22. What is an automatic stabilizer? What is an example?
23. What is supply-side economics?
24. Describe the belief of those that support supply-side economics.
25. List and explain the problems associated with a high national debt.
26. Describe the steps in the budget process.
27. In what order does government pay treasury bonds, treasury notes, and treasury
bills? (Which will mature first?)
28. What were the reasons the U.S. started the Federal Reserve System?
29. What does an increase in government spending do to GDP? How quickly does
change occur?
30. How many FED districts are there?
31. Explain tight and easy money policy.
32. What types of money policy will the FED use when there is a contracted
economy?
33. What are the short term effects of tight and easy money policy?
34. What is the role of the Federal Open Market Committee do?
35. What happens when banks keep more excess reserves?
36. How many Federal Reserve Banks are there?
37. What methods does the FED use to change the money supply?
38. Why might the FED introduce a tight money policy?
39. How are interest rates and the demand for money related?
40. Why does the Federal Reserve change, alter, or use monetary policy?
41. How could the FED encourage banks to lend out more of their reserves?
42. Why does a bank sometimes hold excess reserves?
43. List the ways the Federal Reserve serves the Federal Government:
44. What happens when the Federal Reserve BUYS government securities?
45. What will happen when all of the baby boomers retire?