Question 1

Who owns the U.S.debt? How much of the debt is owned by U.S.government agencies? How much is owned by individuals and how much is owned by foreigners?

Accepted Answer

U.S.citizens,foreign citizens,financial

Question 2

Define deficits,surpluses,and debt.How do accounting practices affect the definitions of deficits and surpluses?

Accepted Answer

A deficit is a shortfall of revenues bel

Question 3

Suppose that the economy has a structural deficit of $200 billion and a budget deficit of $100 billion. It follows that output:

Accepted Answer

A) must equal potential output. 
B) must be above potential output. 
C) must be below its potential output. 
D) could be at, above, or below potential output. 
A) must equal potential output. 
B) must be above potential output. 
C) must be below its potential output. 
D) could be at, above, or below potential output.

Question 4

Why is it important to judge an economy's external debt relative to its assets? (Remember: an internal debt creates an equal amount of financial assets. )Give an example to support your explanation.

Accepted Answer

Looking only at an economy's debt is loo

Question 5

If actual income is $300 billion, potential income is $350 billion, the total surplus is $20 billion, and tax revenue increases with income, then the cyclical deficit can be any of the following except:

Accepted Answer

A) zero. 
B) $1 billion. 
C) $10 billion. 
D) $20 billion. 
A) zero. 
B) $1 billion. 
C) $10 billion. 
D) $20 billion.

Question 6

Suppose that the economy has a structural deficit of $200 billion and is operating above potential output. From this we can infer that the budget as a whole:

Accepted Answer

A) is in deficit. 
B) is balanced. 
C) is in surplus. 
D) could be in deficit, in surplus, or balanced. 
A) is in deficit. 
B) is balanced. 
C) is in surplus. 
D) could be in deficit, in surplus, or balanced.

Question 7

What has been happening to the U.S.government debt and the debt/GDP ratio since WWII?

Accepted Answer

The debt has been increasing but the deb

Question 8

Use the following table to determine which statement is true. $\begin{array}{|c|c|c|}
\hline \text { Year } & \text { Revenues } & \text { Government Expenditures } \
\hline 1946 & 39.3 & 55.2 \
\hline 1947 & 38.5 & 54.5 \
\hline 1948 & 41.6 & 29.8 \
\hline 1949 & 39.4 & 38.8 \
\hline 1950 & 39.4 & 42.6 \
\hline
\end{array}$

Accepted Answer

A) In 1946 and 1950, the budget was in deficit, while from 1948 to 1949, the budget was in surplus. 
B) In 1946 and 1950, the budget was in surplus while from 1948 to 1949, the budget was in deficit. 
C) The debt rose each year from 1946 to 1950. 
D) The debt fell from 1946 to 1950. 
A) In 1946 and 1950, the budget was in deficit, while from 1948 to 1949, the budget was in surplus. 
B) In 1946 and 1950, the budget was in surplus while from 1948 to 1949, the budget was in deficit. 
C) The debt rose each year from 1946 to 1950. 
D) The debt fell from 1946 to 1950.

Question 9

A budget deficit is defined as:

Accepted Answer

A) a shortfall of revenues compared to expenditures. 
B) a shortfall of expenditures compared to revenue. 
C) accumulated deficits minus accumulated surpluses. 
D) accumulated surpluses minus accumulated deficits. 
A) a shortfall of revenues compared to expenditures. 
B) a shortfall of expenditures compared to revenue. 
C) accumulated deficits minus accumulated surpluses. 
D) accumulated surpluses minus accumulated deficits.

Question 10

Economists who focus on fiscal austerity focus on the short-run.

Accepted Answer

A) True 
 B)False

Question 11

The budget deficit or surplus is:

Accepted Answer

A) easy to calculate since there is only one valid method for computing it. 
B) hard to calculate even though there is only one valid method for computing it. 
C) hard to calculate since economists disagree on how it should be computed. 
D) easy to calculate since economists agree on how it should be computed. 
A) easy to calculate since there is only one valid method for computing it. 
B) hard to calculate even though there is only one valid method for computing it. 
C) hard to calculate since economists disagree on how it should be computed. 
D) easy to calculate since economists agree on how it should be computed.

Question 12

If the U.S. inflation rate increases unexpectedly and government revenues, expenditures, and nominal interest rates remain unchanged:

Accepted Answer

A) both the U.S real and nominal budget deficits increases. 
B) only the U.S. real budget deficit increases. 
C) only the U.S. real budget deficit decreases. 
D) both the U.S. real and nominal budget deficits decreases. 
A) both the U.S real and nominal budget deficits increases. 
B) only the U.S. real budget deficit increases. 
C) only the U.S. real budget deficit decreases. 
D) both the U.S. real and nominal budget deficits decreases.

Question 13

The budget deficit or surplus is:

Accepted Answer

A) well defined and straightforward to measure. 
B) well defined but frequently distorted by creative but improper accounting practices. 
C) difficult to measure and can be defined legitimately in several ways. 
D) so arbitrarily defined that it is meaningless. 
A) well defined and straightforward to measure. 
B) well defined but frequently distorted by creative but improper accounting practices. 
C) difficult to measure and can be defined legitimately in several ways. 
D) so arbitrarily defined that it is meaningless.

Question 14

The cyclical deficit:

Accepted Answer

A) is not affected by changes in actual income or potential income. 
B) rises as the economy expands and falls as the economy contracts. 
C) is the deficit that exists if the economy is at potential income. 
D) rises as the economy moves below potential output. 
A) is not affected by changes in actual income or potential income. 
B) rises as the economy expands and falls as the economy contracts. 
C) is the deficit that exists if the economy is at potential income. 
D) rises as the economy moves below potential output.

Question 15

U.S. government debt as a percentage of GDP has been:

Accepted Answer

A) falling steadily since World War II. 
B) increasing steadily since World War II. 
C) fluctuating since World War II. 
D) unchanged since World War II. 
A) falling steadily since World War II. 
B) increasing steadily since World War II. 
C) fluctuating since World War II. 
D) unchanged since World War II.

Question 16

If the real deficit is $100 billion, the inflation rate is 10 percent, and the nominal deficit is $400 billion, then the debt is:

Accepted Answer

A) $1 trillion. 
B) $2 trillion. 
C) $3 trillion. 
D) $4 trillion. 
A) $1 trillion. 
B) $2 trillion. 
C) $3 trillion. 
D) $4 trillion.

Question 17

If taxes and government expenditures were constant and did not vary with income, then:

Accepted Answer

A) cyclical deficits would increase. 
B) cyclical deficits would not exist. 
C) structural deficits would increase. 
D) structural deficits would not exist. 
A) cyclical deficits would increase. 
B) cyclical deficits would not exist. 
C) structural deficits would increase. 
D) structural deficits would not exist.

Question 18

Over the past five years, most countries' debt-to-GDP ratios have risen as a result of the global recession.

Accepted Answer

A) True 
 B)False

Question 19

A policy of fiscal austerity could have difficulty lowering the debt-to-GDP ratio because it might:

Accepted Answer

A) lower potential output and government spending. 
B) raise both GDP and government revenue. 
C) lower both GDP growth and government revenue. 
D) raise potential output and government spending. 
A) lower potential output and government spending. 
B) raise both GDP and government revenue. 
C) lower both GDP growth and government revenue. 
D) raise potential output and government spending.

Question 20

A constant debt-to-GDP ratio in a growing economy is consistent with a:

Accepted Answer

A) continual surplus. 
B) continual deficit. 
C) balanced budget. 
D) falling level of total debt. 
A) continual surplus. 
B) continual deficit. 
C) balanced budget. 
D) falling level of total debt.

Exam 31: Deficits and Debt: the Austerity Debate

Who owns the U.S.debt? How much of the debt is owned by U.S.government agencies? How much is owned by individuals and how much is owned by foreigners?

Define deficits,surpluses,and debt.How do accounting practices affect the definitions of deficits and surpluses?

Suppose that the economy has a structural deficit of $200 billion and a budget deficit of $100 billion. It follows that output:

Why is it important to judge an economy's external debt relative to its assets? (Remember: an internal debt creates an equal amount of financial assets. )Give an example to support your explanation.

If actual income is $300 billion, potential income is $350 billion, the total surplus is $20 billion, and tax revenue increases with income, then the cyclical deficit can be any of the following except:

Suppose that the economy has a structural deficit of $200 billion and is operating above potential output. From this we can infer that the budget as a whole:

What has been happening to the U.S.government debt and the debt/GDP ratio since WWII?

Use the following table to determine which statement is true. Year Revenues Government Expenditures 1946 39.3 55.2 1947 38.5 54.5 1948 41.6 29.8 1949 39.4 38.8 1950 39.4 42.6

A budget deficit is defined as:

Economists who focus on fiscal austerity focus on the short-run.

The budget deficit or surplus is:

If the U.S. inflation rate increases unexpectedly and government revenues, expenditures, and nominal interest rates remain unchanged:

The budget deficit or surplus is:

The cyclical deficit:

U.S. government debt as a percentage of GDP has been:

If the real deficit is $100 billion, the inflation rate is 10 percent, and the nominal deficit is $400 billion, then the debt is:

If taxes and government expenditures were constant and did not vary with income, then:

Over the past five years, most countries' debt-to-GDP ratios have risen as a result of the global recession.

A policy of fiscal austerity could have difficulty lowering the debt-to-GDP ratio because it might:

A constant debt-to-GDP ratio in a growing economy is consistent with a:

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

Economic Growth, Business Cycles, and Unemployment

Measuring and Describing the Aggregate Economy

The Keynesian Short-Run Policy Model: Demand-Side Policies

The Classical Long-Run Policy Model: Growth and Supply-Side Policies

The Financial Sector and the Economy

Monetary Policy

Financial Crises, Panics, and Unconventional Monetary Policy

The Fiscal Policy Dilemma

Jobs and Unemployment

Inflation, Deflation, and Macro Policy

International Financial Policy

Macro Policy in a Global Setting

Structural Stagnation and Globalization

Macro Policy in Developing Countries

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