1. Fiscal year 2009 began on October 1________.

2. Discretionary spending is the largest component of federal spending. ________ (True/False)

3. Two examples of entitlement spending are ________and ________.

4. The two primary sources of federal government revenue are ________and ________.

5. The States and Balanced Budgets. Unlike the U.S. federal government, virtually all states have requirements that they must either plan for or maintain a balanced budget.

a. Suppose the national economy experiences a recession. How will this affect the budgets of the states?

b. What actions must the states then take to balance the budget?

c. Graphically show how these actions, taken together, may destabilize the national economy.

6. Automatic Stabilizers and Fluctuations in Output. Because of automatic stabilizers, states with more generous unemployment insurance programs will experience ________fluctuations in output.

7. A Temporary End to the Estate Tax. The estate tax was eliminated for one year in 2010 and then was scheduled to be restored in 2011. In an attempt at humor, some commentators referred to the movie Throw Momma from the Train. What was the basis of this comparison?

8. Mandatory Spending and Entitlements. Is mandatory spending really mandatory? ________. (yes/no) Explain how mandatory spending differs from discretionary spending. In the face of the coming crisis in entitlement spending, do you believe that mandatory spending will be harder to change than discretionary spending?