Federal Debt – Principles of Macroeconomics Exam

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Federal Debt, Great Depression, Social Security, Principles of Macroeconomics Final Exam

The key words in this Macroeconomics course include Federal Debt, Great Depression, Stock Market , Social Security, Recession, Economic Activity, Federal Income Tax, Principles of Macroeconomics


During the Great Depression, a major financial crisis followed the collapse of the stock market, which led to

a decrease in tax rates and increase in the money supply.

the failure of many banks.

a decrease in barriers to international trade.

an increase in consumer sentiment and spending.

an increase in oil and gas prices.


Over the next 20 years, the number of workers per Social Security beneficiary is predicted to be

less than 1.

less than 2 but more than 1.

less than 5 but more than 3.

more than 5.

less than 3 but more than 2.


Why does the federal debt tend to increase during periods of recession?

Economic activity decreases, which decreases revenues and increases outlays.

Economic activity decreases, which decreases revenues and decreases outlays.

Economic activity increases, which increases revenues and decreases outlays.

Economic activity increases, which decreases revenues and increases outlays.

Economic activity increases, which increases revenues and increases outlays.


Suppose you are offered a job with Amazon upon graduation. Your starting salary will be $70,000, which will put you in the 25 percent federal income tax bracket. The total amount of income taxes you pay is $13,530. Your average tax rate is approximately

37.5 percent.

12.5 percent.

25.0 percent.

19.3 percent.

31.3 percent.


The failure to make required payments on a debt is known as

refinancing.

austerity.

defaulting.

deferring.

defiance.


Should we be concerned about a growing federal debt?

No, because federal debt, unlike private debt, does not have to be repaid.

No, because budget deficits are more important to worry about than the federal debt.

Yes, because a large federal debt may slow the rate of economic growth in the future.

Yes, because it is likely that the government will confiscate the savings of individuals to pay for the debt.

Yes, because if the debt grows too large, we will have to receive bailouts from other countries, which means they will be able to control our policy and economy.