Question 1

Deficit is the difference between government expenditures, which are either purchases or transfer payments and tax receipts.

Accepted Answer

A) True 
 B)False

Question 2

Compared to the size of GDP in 2014, the net national debt was approximately

Accepted Answer

A) 10 percent as large. 
B) 33 percent as large. 
C) 60 percent as large. 
D) about twice as large. 
A) 10 percent as large. 
B) 33 percent as large. 
C) 60 percent as large. 
D) about twice as large.

Question 3

If the economy is in an inflationary gap and the government attempts to balance the budget, the effect will be to

Accepted Answer

A) counteract inflation. 
B) reduce the trade deficit. 
C) continue inflationary pressures. 
D) increase unemployment. 
A) counteract inflation. 
B) reduce the trade deficit. 
C) continue inflationary pressures. 
D) increase unemployment.

Question 4

It is most likely that the federal government will never actually pay off the national debt.

Accepted Answer

A) True 
 B)False

Question 5

If the President and Congress agree to balance the budget during a recession, then the appropriate monetary policy is

Accepted Answer

A) no change from the current policy. 
B) reduce the growth of the money supply. 
C) constant growth of the money supply. 
D) increase the growth of the money supply. 
A) no change from the current policy. 
B) reduce the growth of the money supply. 
C) constant growth of the money supply. 
D) increase the growth of the money supply.

Question 6

Composition of aggregate demand is a major determinant of the economy's long-run economic growth rate.

Accepted Answer

A) True 
 B)False

Question 7

The federal budget went $161 billion in fiscal year 2007 to $1 trillion in the next two to three years.What are the main factors that contributed to this increase?

Accepted Answer

Three main factors contributed to this i

Question 8

Lately, the ratio of debt to GDP has been

Accepted Answer

A) rising at a small rate. 
B) rising steadily. 
C) falling modestly. 
D) staying constant. 
A) rising at a small rate. 
B) rising steadily. 
C) falling modestly. 
D) staying constant.

Question 9

Crowding in can be defined as

Accepted Answer

A) an increase in the budget deficit increases demand so that investment increases. 
B) tax incentives on investment encourage capital formation, an increase in aggregate supply. 
C) consumption rises in a recovery, which increases demand for investment. 
D) the budget deficit falls enough to lower interest rates to stimulate investment. 
A) an increase in the budget deficit increases demand so that investment increases. 
B) tax incentives on investment encourage capital formation, an increase in aggregate supply. 
C) consumption rises in a recovery, which increases demand for investment. 
D) the budget deficit falls enough to lower interest rates to stimulate investment.

Question 10

A budget surplus is defined as the amount that the

Accepted Answer

A) government owes to lenders at any moment in time. 
B) government spends in any time period. 
C) government's expenditures exceed receipts in any time period. 
D) government's receipts exceed expenditures in any time period. 
A) government owes to lenders at any moment in time. 
B) government spends in any time period. 
C) government's expenditures exceed receipts in any time period. 
D) government's receipts exceed expenditures in any time period.

Question 11

Whether or not deficits create a burden depends on how and why the government incurred the deficits in the first place.Explain.

Accepted Answer

If the government runs deficits to fight

Question 12

At the end of 2014, the net national debt per person in the United States was approximately

Accepted Answer

A) $14 trillion. 
B) $142 billion. 
C) $56,000. 
D) $86,000. 
A) $14 trillion. 
B) $142 billion. 
C) $56,000. 
D) $86,000.

Question 13

Which of the following individuals would be most likely to support a balanced budget amendment to the constitution?

Accepted Answer

A) "Christmas is when children ask Santa Claus for things and their parents pay for them.Deficits is when adults ask government for things and their children pay for them." -Richard Lamm 
B) "In a boom, inflation can be caused by allowing unlimited credit to support excited enthusiasm of business speculators.But in a slump government expenditure is the only sure means of obtaining quickly a rising output." -J.M.Keynes 
C) "If we face a recession we should not lay off employees.Employees are not guilty; why should they suffer?" -Akio Morita 
D) "Underbalancing the budget during a depression is not primarily a deliberate policy but a practical necessity." -Gunnar Myrdal 
A) "Christmas is when children ask Santa Claus for things and their parents pay for them.Deficits is when adults ask government for things and their children pay for them." -Richard Lamm 
B) "In a boom, inflation can be caused by allowing unlimited credit to support excited enthusiasm of business speculators.But in a slump government expenditure is the only sure means of obtaining quickly a rising output." -J.M.Keynes 
C) "If we face a recession we should not lay off employees.Employees are not guilty; why should they suffer?" -Akio Morita 
D) "Underbalancing the budget during a depression is not primarily a deliberate policy but a practical necessity." -Gunnar Myrdal

Question 14

Is the national debt a burden to future generations?

Accepted Answer

A) No, as long as foreigners own a significant share of the national debt. 
B) No, as long as the national debt is owned purely by U.S.citizens. 
C) Yes, debt is always a burden to future generations. 
D) Yes, unless foreigners increase their share of the national debt. 
A) No, as long as foreigners own a significant share of the national debt. 
B) No, as long as the national debt is owned purely by U.S.citizens. 
C) Yes, debt is always a burden to future generations. 
D) Yes, unless foreigners increase their share of the national debt.

Exam 32: Budget Deficits in the Short and Long Run

Deficit is the difference between government expenditures, which are either purchases or transfer payments and tax receipts.

Compared to the size of GDP in 2014, the net national debt was approximately

If the economy is in an inflationary gap and the government attempts to balance the budget, the effect will be to

It is most likely that the federal government will never actually pay off the national debt.

If the President and Congress agree to balance the budget during a recession, then the appropriate monetary policy is

Composition of aggregate demand is a major determinant of the economy's long-run economic growth rate.

The federal budget went $161 billion in fiscal year 2007 to $1 trillion in the next two to three years.What are the main factors that contributed to this increase?

Lately, the ratio of debt to GDP has been

Crowding in can be defined as

A budget surplus is defined as the amount that the

Whether or not deficits create a burden depends on how and why the government incurred the deficits in the first place.Explain.

At the end of 2014, the net national debt per person in the United States was approximately

Which of the following individuals would be most likely to support a balanced budget amendment to the constitution?

Is the national debt a burden to future generations?

What Is Economics

The Economony: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

The Economics of the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

The Trade-Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

Contemporary Issues in the Useconomy

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