Ch. 14 Essentials / Study Guide

Name: _____________________________________________
Ch. 14 Essentials/Study Guide
1) What is the difference between the “deficit” and the “debt”?
2) Define the following:
a. Progressive Taxation:
b. Flat tax:
c. Regressive Taxation:
3) In what ways does the federal government borrow money?
4) From your textbook, what are 3 reasons why economists are concerned with the increasing federal debt?
5) Define and provide an example for the term “tax expenditure”:
a. Definition:
b. Example:
6) Your textbook makes the argument that tax expenditures primarily benefit the middle and upper classes.
Explain this argument.
7) The growth of the federal budget burden is primarily the result of expansions to the “national security state”
and to the “Social Service State.” Answer the following about these two areas of expansion:
a. The Department of Defense accounts for what percentage of the federal budget:
b. Why has it increased so dramatically in past decades?
c. What was the original mandate of the Social Security Act?
d. In 1950, the Social Security benefit of 1 worker was paid for by the contributions of _______ workers.
In 1990, that number was __________. By 2055 it is estimated that number will be _________.
e. Social Security and Medicare account for what percentage of the federal budget?
f. In 2011, Social Security plus Medicare cost $____________________________ for the year.
h. Give 2 reasons why has Social Security has grown to be such a huge expenditure
Define “incrementalism”
9) Define “Uncontrollable Expenditures”
10) Define “Entitlements” and give 2 examples that are NOT Social Security or Medicare
11) What is the role of the Office of Management and Budget (OMB) and the Government Accountability Office
(GAO) in the budgetary process?
12) Explain the role of the following in the budget making/approval process:
a. Legislative Branch:
b. Executive Branch:
13) Describe the difference between appropriations and authorization bills.
14) Define “reconciliation”
15) How is tax policy and spending in the United States different from other Western nations?