Exam 33: Fiscal Policy, Deficits, and Debt

If the cyclically adjusted budget has a zero deficit but the actual budget has a $100 billion deficit, then that means that the government is pursuing an expansionary fiscal policy.

Economists refer to a budget deficit that exists when the economy is achieving full employment as a

If Congress passes legislation to increase government spending to counter the effects of a recession, then this would be an example of a(n)

The impact of an expansionary fiscal policy may be strengthened if it crowds out some private investment spending.

The public debt is the accumulation of all deficits and surpluses that have occurred through time.

If the government wishes to increase the level of real GDP, it might reduce

The crowding-out effect refers to the possibility that deficit spending may motivate people to increase their saving in anticipation of higher future taxes.

Assume that if there were no crowding out, an increase in government spending would increase GDP by $100 billion.If there had been partial crowding out, however, then GDP would have

From 2010 to 2015, the actual as well as the cyclically adjusted federal budget deficits as percentages of GDP in the U.S.have

If the government wants to reduce unemployment using fiscal policy, it may do so by increasing government spending.

Which of the following serves as an automatic stabilizer in the economy?

As of 2015, more than half of the total debt of the U.S.government was owed to foreigners.

The cyclically adjusted budget refers to

The economy is in a recession.The government enacts a policy to increase spending by $2 billion.The MPS is 0.2.What would be the full increase in real GDP from the change in government spending, assuming that the aggregate supply curve is horizontal across the range of GDP being considered?

The effect of an increase in the government budget deficit on the equilibrium level of GDP is essentially the same as a(n)

The flexibility of the price level tends to dampen the multiplier effect of fiscal policy.

Which of the following is the best example of public investment?

Without a change in discretionary fiscal policy, we would expect that if the economy goes into recession, then the

Most of the U.S.public debt is owed to the nation's citizens and domestic institutions.This is one reason that the public debt

The operational lag of fiscal policy refers to the time that elapses between the beginning of a recession or inflation and the certain awareness that it is actually happening.