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1. What are the three major categories of revenues for the federal government? Please comment on each and indicate their relative importance to each other. Relative importance can be indicated by dollar amounts, percent of total revenue or expenditure or, though less informative, by ranking.
The three major categories of revenues for the federal government are individual income tax, payroll taxes, and corporate income tax. The individual income tax is the most important source of revenue of the US government. This tax forms 45% of the total revenue of the Federal tax revenue. The tax revenue forms 90% of the Federal revenue. The second category of revenues is the payroll taxes. These are 36% of the total tax revenues. The payroll taxes include federal workers' pension contribution, unemployment insurance, and railroad retirement. The third category of revenue is the corporate income tax. This forms 12% of the tax revenues. This breakup is based on 2008 figures and taken from www.cbo.gov/ftpdocs/100xx/doc10014/HistoricalMar09.pdf.
2. What are the three major categories of expenditures for the federal government? Please comment on each and indicate their relative importance to each other. Relative importance can be indicated by dollar amounts, percent of total revenue or expenditure or, though less informative, by ranking.
The three major categories of expenditure for federal government are defense 20% of the budget in 2010, social security at 20% of the budget, three health insurance programs (Medicare, Medicaid, and Children's Health Insurance Program) at 21 percent of the budget. The defense budget includes costs of security related activities including international activities. This spending also includes expenditure incurred in Iraq and ...
This explanation provides you a comprehensive argument relating to Fiscal Policy
Fiscal Policy: Government Expenditures, Revenues, Budget, Debt
Fiscal Policy: Government Expenditures and Revenues, Budget, National Debt
1. Do all government purchases have the same effect on aggregate demand? Defend your answer with economic reasoning.
2. Suppose a country increases government purchases by $100 billion. Suppose the multiplier is 1.5 and the economy's real GDP is $5,000 billion.
a. In which direction will the aggregate demand curve shift and by how much?
b. Why is the change in real GDP is likely to be smaller than the shift in the aggregate demand curve?
3. What is "crowding out," and how does it reduce private investment?
a. Given that only certain types of government expenditures crowded out private investment, what are the implications for fiscal policy choices?View Full Posting Details