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Mandatory Outlays, Payroll Tax Rate, Discretionary outlays, Principles of Macroeconomics

The key terms in this Macroeconomics course include Mandatory Outlays, Social Security, Payroll Tax Rate, Discretionary outlays, Progressive Tax Rate, Excise Taxes, Government Spending, Monetary Policy, Marginal Propensity, Principles of Macroeconomics.

When Social Security was first instituted by President Franklin Roosevelt in 1935, the payroll tax rate on wages used to fund the program was

4 percent.

5 percent.

2 percent.

1 percent.

3 percent.

Excise taxes are levied on


property that is gifted to others.

corporate income.

individual income.

specific goods or commodities.

Mandatory outlays are different than discretionary outlays because

discretionary outlays can be changed during the annual budget process, whereas mandatory outlays cannot.

mandatory outlays have been decreasing as a percentage of the federal budget, whereas discretionary outlays have been increasing as a percentage of the federal budget.

discretionary outlays comprise the vast majority of the total budget, whereas mandatory outlays make up only a minor fraction.

Theses outlays usually change during the budget process, whereas discretionary outlays do not.

discretionary outlays include entitlement programs (such as Social Security and Medicare), whereas mandatory outlays include important government programs (such as defense).

An initial increase in government spending of $100 billion can create more than $100 billion through what economists call a(n) ________ effect.



interest rate

aggregate supply


If an initial increase in government spending of $100 billion leads to a total increase of $400 billion in income, the marginal propensity to consume in the economy is






Progressive tax rates, taxes on corporate profits, unemployment compensation, and welfare programs are all examples of

pro-cyclical fiscal policies.

automatic stabilizers.

monetary policies.

automatic balancers.

discretionary fiscal policies.


play a role in fiscal policy but not in monetary policy.

are easily studied in economics.

have no effect on monetary policy.

have no effect on consumers’ spending habits.

can dampen the effects of monetary policy.