Assignment 1

 

Reading: The U.S. Deficit/Debt Problem: A Longer-Run Perspective

 

 

 

Multiple-Chioice Questions (Circle One)

 

1. According to the article, the U.S. debt relative to the GDP is ________

 

1. about 50%

 

2. about 10%

 

3. greater than 100%

 

4. approximately 40%

 

5. around 30%

 

2. Until the financial crisis of  2008-2009, large federal deficits have occurred _______

 

1. during periods of full employment.

 

2. during periods of great wars.

 

3. during periods of minor recessions.

 

4. During presidential election years.

 

 

 

3. A marked change in the behavior of the deficit occurred around ________.

 

1. 1800

 

2. 1936

 

3. 1950

 

4. 1970

 

5. 1988

 

 

 

4. Over the period 1970 – 2007, the major drivers of federal spending were ______________.

 

1. defense and foreign aid

 

2. interest paid on the public debt and other federal expenditures

 

3. defense and other payments to individuals

 

4. social security/Medicare/Medicaid and other payments to individuals

 

5. Other federal expenditures and defense

 

 

 

5. Between 1979 and 2011, federal discretionary spending __________ as a percent of total government spending.

 

1. decreased

 

2.  increased

 

 

 

6. Total revenue from individual income taxes and Social Security taxes account for over _________ if total federal tax revenue.

 

1. 103%

 

2.   96%

 

3.   81%

 

4.   13%

 

5.     6%

 

 

 

7. Over the period 1979-2011, corporate tax revenue represented about __________ of total federal tax revenues.

 

1. 75%                            c.   24%            e.   10%

 

2. 37%                            d.   16%

 

8. The numerous changes in the marginal individual income tax over the period 1972-2011 have had little perceptible effect on total federal tax revenues as a percent of GDP.

 

1. True

 

2.  False

 

9. Since 1979, the lowest-income earners have benefited the most from all  tax law changes as measured by the average tax rate.

 

1. True

 

2.  False

 

10. Since 1979, the top 5 percent of income earners has had the highest average social insurance tax rate.

 

1. True

 

2.  False           

 

 

 

Short Answer

 

1.     
Discuss the advantages and disadvantages of raising the social security tax and the marginal rates on the individual income tax.

 

 

 

 

 

 

 

 

 

 

 

 

 

2. What is the European Fiscal Compact?

 

 

 

Updated the Data

 

1. What was the ratio of the gross federal debt held by the public to GDP in 2015?

 

 

 

 

2. What percentage of total federal revenue came from individual income taxes and payroll taxes in 2015?

 

 

 

 

3. What was the ratio of the federal deficit to GDP in 2015?

 

 

 

 

4. What was the ratio of mandatory spending to total federal outlays in 2015?

 

 

 

 

5. What is the projected (by CBO) ratio of mandatory spending to total federal outlays in 2026?

 

 

 

 

6. What is the projected ratio of mandatory spending to total federal revenues in 2026?

 

 

 

 

7. Attach a graph of the federal deficit or surplus (not seasonally adjusted) as a percent of GDP for the period 1930 –2015.

 

 

 

8. Attach a graph of the total federal debt as a percentage of GDP (seasonally adjusted) for the years 1966-2015.

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