QUESTION 13 Why is it unlikely that tax increases will be th

QUESTION 13

Why is it unlikely that tax increases will be the way to eliminate current U.S. federal budget deficits?

Since World War II, on average when taxes were increased by a dollar, federal government spending increased by that much and more.

The revenues generated by increasing taxes on the rich would only pay for a small portion of the federal budget deficit in any recent year.

Increasing every worker\'s taxes by the same amount could eliminate the deficit, but it is likely this action would be viewed as too burdensome for workers with modest incomes.

All of the above.

0.42 points   

QUESTION 14

Which of the following statements is false?

A budget deficit of $25 billion in a given year increases the public debt by $25 billion.

The public debt of $25 billion is the accumulated debt of all U.S. individuals, firms, and institutions.

The federal budget deficit in 2004 was about 4 percent of the GDP.

During the past five years, the U.S. public debt has been increasing.

0.42 points   

QUESTION 15

Politicians have suggested that the budget deficit could be reduced by

lowering the interest rates.

forbidding interest payments on government bonds outsourcing.

increasing taxes and reducing expenditures.

imposing higher tariffs on imported goods.

Solution

Ans 13) the correct option is all of the above.

Ans14) the correct option is The public debt of $25 billion is the accumulated debt of all U.S. individuals, firms, and institutions

Ans15) the correct option is increasing taxes and reducing expenditures. budget deficit occurs when government spending exceeds the government revenue, it should be corrected when government increases its revenue by increasing taxes.