Question

3. The U.S. federal government finances budget deficits by
A. selling stock, much like a corporation.
B. printing additional currency.
C. borrowing from the public.
D. raising property taxes.
E. raising sales taxes.

4. According to long-run projections, under current law,
A. federal government spending as a percentage of GDP will rise gradually but substantially in the next several decades.
B. federal taxes as a percentage of GDP will rise gradually but substantially in the next several decades.
C. the federal government’s budget deficit will gradually be eliminated in the next several decades.
D. All of the above are correct.
E. B and C, only

Suppose that the government taxes income in the following fashion: 15 percent of the first $50,000, 20 percent of the next $50,000, and 25 percent of all income over $100,000. George earns $84,000, and Martha earns $92,000. Which of the following statements is correct?
(x) George's average tax rate is lower than his marginal tax rate.
(y) George's average tax rate is lower than Martha's average tax rate.
(z) George's marginal tax rate is less than Martha's marginal tax rate.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (y) only

Answer 1

3) Option C

borrowing from public

• The US federal government finance budget devices by borrowing from public.
• A budget deficit leads to higher interest rates and increase in price of products.
• The federal govt seek more treasury security by borrowing from public.