Exam 14: Budget Balance, National Debt, and Investment

A decreasing government debt

A decreasing government debt

An increase in government purchases

In an economy with a constant cash deficit of 3 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 questions with which Chapter 14 is concerned include each of the following except

Economists suggest that governments should adopt capital budgeting because

Each of the following is a possible effect of budget deficit except

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

The higher the debt-to-GDP ratio,

An increase in government purchases

In the short-run, a government budget deficit produced by a tax cut

If the labor force growth rate decreases,

An increase in the full-employment deficit

In the short-run, the effect on real GDP of a government budget surplus produced by a tax increase will be neutralized if

When real GDP increases and unemployment decreases

In the short-run, a government budget surplus produced by tax increases

A deficit is sustainable only if

The only three time periods in which the upward movement in the debt-to-GDP ratio was not associated with a war were

The real deficit (d^r)

A rising government debt