Question

Q1. Which of the following is true about the United States federal government budget since 1965?...

Q1.

Which of the following is true about the United States federal government budget since 1965?

A.The federal government has run a budget deficit in most years.

B.The federal government has never experienced a budget surplus.

C,The federal government has always run a budget deficit.

D,The federal government has balanced its budget in most years.

Q2:

To avoid an increase in the size of the U.S. federal government’s fiscal imbalance, the Congressional Budget office evaluates the impact of a policy change over a ten year window. Which of the following was a way for policy makers to improve the policy outlook for the tax cuts of 2001?

A.The tax cuts were set to expire in December 2010, reducing their long-run costs.

B.Tax rates were set to increase in 2006, offsetting the effect of tax cut.

C.all of these

D.The Congressional Budget office did not evaluate the consequences of the 2001 tax cut.

Q3.

Assume an interest rate of 5%. What is the maximum amount an individual would be willing to give up today in exchange for $1, paid 30 years in the future?

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Answer #1

Answer 1 - correct Option is C

Reason -federal Government has experienced deficit in most of the recent years since 1965. The deficit of the government has increased from $51.20 billion in 1965 to $585 billion in 2019.

Answer 2 - correct option is C

Reason

  • In 2001 tax cut were about to expire leading to reduction in long run cost
  • Tax rate was about to increase in 2006 offsetting the effect of tax cut

Answer 3 = $0.40

Solution

Formula =

Principal = Amount /(1+ rate× time)

Principal = 1/(1+0.05×30)

Principal = $0.40

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