Exam 17: Macroeconomic Policy Debates

Suppose the government has a $375 billion budget deficit. If the government creates $225 billion of new money to finance this deficit and finances the rest by borrowing, the amount borrowed from the public will be

In bringing an economy out of a recession, a government will often resort to ________ fiscal policies, which often results in budget deficits.

In the 1980s and most of the 1990s, the federal government

In its basic form, an IRA simply does what to taxes?

Automatic stabilizers are changes in ________ that occur automatically as economic activity changes.

Should the Fed only have the single goal of price stability? Why or why not?

Suppose the government has a $900 billion budget deficit. If the government borrows $560 billion to finance this deficit and finances the rest by printing money, the amount of new money created will be

Budget deficits inevitably lead to inflation in

By NOT taxing capital gains separately from ordinary income, what would happen to the government's stream of revenue?

If government spending is $6.2 trillion while government revenue is $6.2 trillion, the government is said to have a

Interest payments on the national debt are not a problem because we owe all of it to ourselves.

Government expenditures are defined as

Define capital gains.

If government spending is $650 billion while government revenue is $950 billion, the government is said to have a

Proponents of a balanced budget amendment to the Constitution argue that it will finally exert discipline on the federal government and so prevent large peacetime deficits. What do the critics argue?

Government debt "crowds out" private investment because

Recall the Application about the possibility that the Federal Reserve's loose monetary policy was responsible for the housing boom during the 2000s to answer the following question(s). -According to this Application, economist John Taylor believes that if the Fed had not followed "easy money" policy during the early 2000s,

When a government must operate on a balanced budget, it means that there is no ________ or ________.

During 2008 and 2009, the debt to GDP ratio in the United States

In the United States there are some methods to save which reduce taxes on savings. These include