Exam 17: Macroeconomic Policy Debates

Recall the Application about why the U.S. federal government took over the debt of the state governments in the late 1700s to answer the following question(s). -According to this Application, in exchange for the federal government absolving their debts, the states were willing to give up their ability to raise revenue from collecting

The federal government has a Constitutional requirement to operate a balanced budget each fiscal year.

The standard way to measure the effects of debt in an economy is to look at the stock of debt relative to

The federal government ran a budget deficit of approximately $1.3 trillion in 2010.

Suppose the government has a $180 billion budget deficit. If the government creates $95 billion of new money to finance this deficit and finances the rest by borrowing, the amount borrowed from the public will be

Automatic stabilizers were clearly in evidence during the recession of 2007-2009 as

Suppose the government's initial debt is $400 billion. If for the next three years the government runs deficits of $150, $125, and $200 billion, the government's additional debt at the end of the three years will be

Capital gains are a type of income earned from

Arguments against the balanced budget amendment include all of the following EXCEPT

Many economists believe that our price indexes ________ the true inflation rate.

Who pays the interest on government debt for the money it borrows today?

Complete price stability would be the result of

If government spending is $900 billion while government revenue is $600 billion, the government is said to have a

An economy's capital stock is increased when individuals and institutions use savings to increase capital investment in stocks and bonds.

President Obama's 2009 stimulus package greatly increased the budget deficit.

When the government prints more money to finance debt, it is actually creating a situation that could result in

A flat tax which does not allow for deductions or credits is essentially a tax on

Suppose the actual budget deficit remains unchanged when the economy falls into a recession. This is an indication that

Automatic stabilizers dampen economic fluctuations during recessions because ________ decrease while ________ increase.

If there was a federal budget surplus it would make it possible to