Explain how the largest sources of state tax revenues differs from the largest sources of federal tax revenues
What will be an ideal response?
The two largest sources of federal tax revenues are from the personal income tax and Social Security taxes. Most state tax revenues are from sales and property taxes. There are no federal property or sales taxes. There is no state Social Security tax. And, although there are state income taxes, they do not take in as much revenue as do other state taxes.
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To decrease the money supply using the reserve requirements, what would the Fed typically do?
A) let each bank get less currency from the Treasury B) raise the reserve requirement for banks C) reduce the reserve requirement for banks D) make each bank voluntarily set its own reserve levels
Refer to Figure 27-11. If government purchases increase by $100 billion and lead to an ultimate increase in aggregate demand as shown in the graph, the difference in real GDP between point A and point B will be
A) less than $100 billion. B) $100 billion. C) more than $100 billion. D) There is insufficient information given here to draw a conclusion.