Chapter 11: Government Taxation and Fiscal Policy

These flashcards cover key concepts related to government taxation and fiscal policy, including amendments, regulatory measures, and economic principles.

What amendment to the Constitution gave the U.S. federal government the power to tax income?

The Sixteenth Amendment.

In which century was the U.S. government given the power to tax income?

Early 1900s.

How much tax revenue does the federal government collect today?

Nearly $5 trillion a year.

From which source does nearly half of the federal government's tax revenues come?

Individual income taxes.

What percentage of the federal government's tax revenues came from customs, whiskey, and tobacco taxes prior to 1913?

A very small percentage as most came from tariffs and excise taxes.

Which of the following is an example of an income transfer?

Unemployment benefits paid to a factory worker who was laid off.

What is the term used to describe the use of government taxes and spending to alter macroeconomic outcomes?

Fiscal policy.

What is disposable income?

Personal income after personal taxes.

What is a budget surplus?

An excess of government revenues over government expenditures in a given time period.

Which fiscal policy action can reduce a budget deficit?

Reducing government expenditure.

What is the fiscal year for the federal government?

A 12-month period used for federal government accounting purposes.

How many taxpaying workers are there approximately for every retiree today?

Approximately 2.5 taxpaying workers.

What spending amount was included in the federal budget for 2023 for Social Security benefits?

Approximately $1.3 trillion.

What do automatic stabilizers help to do in fiscal policy?

Moderate the extreme swings of the business cycle.

What does crowding out refer to in fiscal policy?

When government spending leads to a decrease in private sector investment.

What is the cyclical deficit reflecting?

Fluctuations in economic activity.