Exam 14: Budget Balance, National Debt, and Investment

An increase in the full-employment deficit

To turn the cash budget into the full-employment budget,

An increase in the government's budget deficit

Each of the following is a potential destructive political consequence of government budget deficits except

Each of the following is a reason why economists are interested in the debt and the deficit except

The higher the debt-to-GDP ratio,

If the Federal Reserve tightens monetary policy so that real interest rates increase and real GDP decreases,

In a year when government spending is greater than tax collections,

When real GDP decreases and unemployment increases

Each of the following was a factor in bringing the rise in the debt an end except

A decreasing government debt

A rising government debt

In a year when government spending is less than tax collections,

The United States debt-to-GDP ratio reached its lowest level in history

A rising government debt

In an economy with a constant cash deficit of 4 percent of GDP, a long-run inflation rate of 2% per year, a labor force growth rate of 2% per year, and a growth rate of output per worker of 1% per year,

The lower the debt-to-GDP ratio,

If the cash deficit-to-GDP ratio decreases,

If the inflation rate increases,

Lower full-employment deficits