Someone in economics, please help, just got a promotion and they are asking economic questions.?

Question

Explansionary fiscal policy actions include ____government spending and/or ___________taxes, while contractionary fiscal policy actions include _______government spending and/or__________taxes.
a. increasing: increasing: decreasing; decreasing
b. decreasing; decreasing;increasing increasing
c. increasing; decreasing;increasing; decreasing
d. decreasing; increasing; increasing; decreasing
e. increasing; decreasing; decreasing; increasing

The social security tax charges a constant rate on income up to a limit (say $70,000) and goes to zero after it reaches the limit. The tax is therefore ____up to the limit, but ____if we compare people who earn below the limit to those whose earnings are above the limit.
a. progressive, regressive
b. proportional, regressive
c. regressive, proportional
d. proportional, progressive

Answer 1

It's "expansionary" and the answer is (e). Expansionary means putting more money into economy and you do this by having the government spend money and by decreasing taxes. Contractionary actions takes money out by having the government spend less and by taxing more.

Of course, spending more and taxing less could mean that the government has to borrow and this could have opposing consequences in the future ( e.g. increasing deficits and a growing national debt might mean that the government has to pay interest on the debt --- which, if to foreigners, might take money OUT of the economy-- and it could cause higher interest rates which also decreases the private sector's ability to finance growth.

The answer to the second question is (b). Up to the limit, the rate is proportional. Above the limit, people earning more pay NO tax on that income and so it is regressive.

Answer 2

Explansionary fiscal policy actions include _increasing_government spending and/or _decreasing_taxes, while contractionary fiscal policy actions include _decreased_government spending and/or_increased_taxes.

idea behind fiscal expansion is to pump money into economy, not by printing it (which would cause inflation) but by taking less in taxes or buying more stuff from private companies.

The social security tax ...
b. proportional, regressive
regressive = rich pay lower % of income than poor.

Answer 3

Haha! They should have tested you b4 promoting you.

E and B.