Question 1

By approximately how much would the federal government have to raise each worker's annual taxes to eliminate the current federal budget deficit?

Accepted Answer

A) between $50 and $100 per year 
B) about $50,000 per year 
C) between $50,000 and $100,000 per year 
D) about $4,000 per year 
A) between $50 and $100 per year 
B) about $50,000 per year 
C) between $50,000 and $100,000 per year 
D) about $4,000 per year

Question 2

Which of the following has NOT been proposed as a possible economic solution to reducing the government deficit?

Accepted Answer

A) reducing expenditures 
B) increasing taxes for the rich 
C) increasing the number of entitlements 
D) increasing taxes for everyone 
A) reducing expenditures 
B) increasing taxes for the rich 
C) increasing the number of entitlements 
D) increasing taxes for everyone

Question 3

If the government has no debt initially, but then has annual revenues of $10 billion per year for 4 years and annual expenditures of $10.5 billion per year for 4 years, then the government has

Accepted Answer

A) a budget surplus of $0.5 billion per year and a debt of $2 billion at the end of the 4 years. 
B) a budget deficit of $0.5 billion per year and a budget surplus of $2 billion at the end of the 4 years. 
C) a budget deficit of $0.5 billion per year and a debt of $2 billion at the end of the 4 years. 
D) a budget surplus of $0.5 billion per year and a surplus of $2 billion at the end of the 4 years. 
A) a budget surplus of $0.5 billion per year and a debt of $2 billion at the end of the 4 years. 
B) a budget deficit of $0.5 billion per year and a budget surplus of $2 billion at the end of the 4 years. 
C) a budget deficit of $0.5 billion per year and a debt of $2 billion at the end of the 4 years. 
D) a budget surplus of $0.5 billion per year and a surplus of $2 billion at the end of the 4 years.

Question 4

The difference between gross public debt and net public debt is that

Accepted Answer

A) net public debt includes interagency borrowing while the gross domestic product debt does not. 
B) net public debt is expressed in real terms while gross public debt is expressed in nominal terms. 
C) gross public debt includes interagency borrowing while net public debt does not. 
D) gross public debt is held by individuals while net public debt is held by the government. 
A) net public debt includes interagency borrowing while the gross domestic product debt does not. 
B) net public debt is expressed in real terms while gross public debt is expressed in nominal terms. 
C) gross public debt includes interagency borrowing while net public debt does not. 
D) gross public debt is held by individuals while net public debt is held by the government.

Question 5

Historical evidence seems to indicate that

Accepted Answer

A) budget and trade deficits generally move in the same direction. 
B) budget and trade deficits generally move in the opposite direction. 
C) there is no consistent relationship between trade and budget deficits. 
D) trade and budget deficits decrease when the president is a Republican, and increase when the president is a Democrat. 
A) budget and trade deficits generally move in the same direction. 
B) budget and trade deficits generally move in the opposite direction. 
C) there is no consistent relationship between trade and budget deficits. 
D) trade and budget deficits decrease when the president is a Republican, and increase when the president is a Democrat.

Question 6

Which of the following statements has usually held TRUE about the relationship between the trade deficits and government budget deficits?

Accepted Answer

A) There is no relationship between trade deficits and budget deficits. 
B) There is a positive relationship between trade deficits and budget deficits. 
C) There is a negative relationship between trade deficits and budget deficits. 
D) A relationship exists only when there is a balanced budget. 
A) There is no relationship between trade deficits and budget deficits. 
B) There is a positive relationship between trade deficits and budget deficits. 
C) There is a negative relationship between trade deficits and budget deficits. 
D) A relationship exists only when there is a balanced budget.

Question 7

Expressing the U.S. federal budget deficit as a percentage of Gross Domestic Product (GDP)

Accepted Answer

A) results in inflation-adjusted revenue and expenditure numbers. 
B) helps us understand the size of the deficit relative to the size of the economy. 
C) was useful through the 1980s, but is no longer helpful because both the deficit and real Gross Domestic Product (GDP)have grown so large. 
D) is only useful if the budget deficit is rising at an annual rate of more than 4 percent. 
A) results in inflation-adjusted revenue and expenditure numbers. 
B) helps us understand the size of the deficit relative to the size of the economy. 
C) was useful through the 1980s, but is no longer helpful because both the deficit and real Gross Domestic Product (GDP)have grown so large. 
D) is only useful if the budget deficit is rising at an annual rate of more than 4 percent.

Question 8

Suppose that the federal government had a budget deficit of $80 billion in year 1 and $90 billion in year 2, but that it experiences budget surpluses of $40 billion in year 3 and $20 billion in year 4. Also assume that the government uses any budget surpluses to pay down the public debt. At the end of these four years, the Federal government's public debt would have

Accepted Answer

A) decreased by $110 billion. 
B) increased by $230 billion. 
C) increased by $110 billion. 
D) decreased by $57.5 billion. 
A) decreased by $110 billion. 
B) increased by $230 billion. 
C) increased by $110 billion. 
D) decreased by $57.5 billion.

Question 9

When was the last year the United States had a budget surplus?

Accepted Answer

A) 2014 
B) 1984 
C) 1993 
D) 2001 
A) 2014 
B) 1984 
C) 1993 
D) 2001

Question 10

Suppose the economy is initially experiencing a short-run recessionary gap. An increase in the size of the budget deficit will

Accepted Answer

A) increase the size of the recessionary gap. 
B) reduce the size of the recessionary gap. 
C) lead to an increase in prices with no increase in real GDP. 
D) lead to a decrease in prices with an increase in real GDP. 
A) increase the size of the recessionary gap. 
B) reduce the size of the recessionary gap. 
C) lead to an increase in prices with no increase in real GDP. 
D) lead to a decrease in prices with an increase in real GDP.

Question 11

A federal deficit of $300 billion means that

Accepted Answer

A) the government has a total debt of $300 billion. 
B) government spending is $300 billion a year. 
C) the government is spending $300 billion a year more than it is collecting in taxes. 
D) the government plans on collecting $300 billion in taxes this year. 
A) the government has a total debt of $300 billion. 
B) government spending is $300 billion a year. 
C) the government is spending $300 billion a year more than it is collecting in taxes. 
D) the government plans on collecting $300 billion in taxes this year.

Question 12

The total value of all outstanding federal government securities is called

Accepted Answer

A) the budget deficit. 
B) the public debt. 
C) the trade deficit. 
D) crowding out. 
A) the budget deficit. 
B) the public debt. 
C) the trade deficit. 
D) crowding out.

Question 13

When foreign residents buy U.S. Treasury securities to finance the budget deficit

Accepted Answer

A) we can also anticipate an increase in the trade deficit. 
B) we can also anticipate a decrease in the trade deficit. 
C) the trade deficit will not be affected. 
D) the public debt will be reduced. 
A) we can also anticipate an increase in the trade deficit. 
B) we can also anticipate a decrease in the trade deficit. 
C) the trade deficit will not be affected. 
D) the public debt will be reduced.

Question 14

Politicians have suggested that the budget deficit could be reduced by

Accepted Answer

A) increasing taxes and reducing expenditures. 
B) lowering the interest rates. 
C) imposing higher tariffs on imported goods. 
D) forbidding interest payments on government bonds outsourcing. 
A) increasing taxes and reducing expenditures. 
B) lowering the interest rates. 
C) imposing higher tariffs on imported goods. 
D) forbidding interest payments on government bonds outsourcing.

Question 15

Which of the following is the best measure of the total amount that the federal government owes to private owners of U.S. Treasury securities?

Accepted Answer

A) government interagency borrowing 
B) the government budget deficit 
C) the gross public debt 
D) the net public debt 
A) government interagency borrowing 
B) the government budget deficit 
C) the gross public debt 
D) the net public debt

Question 16

Explain the differences between the public debt and the government budget deficit.

Accepted Answer

The public debt is a stock measured at a

Question 17

Gross public debt minus all government interagency borrowing is

Accepted Answer

A) government budget deficit. 
B) net public debt. 
C) U.S. Treasury bonds. 
D) an entitlement. 
A) government budget deficit. 
B) net public debt. 
C) U.S. Treasury bonds. 
D) an entitlement.

Question 18

If the government's spending exactly equals its revenues during a budget year, that government is

Accepted Answer

A) running a budget deficit. 
B) experiencing a budget surplus. 
C) balancing its budget. 
D) paying off its public debt. 
A) running a budget deficit. 
B) experiencing a budget surplus. 
C) balancing its budget. 
D) paying off its public debt.

Question 19

Assume the economy is closed and that it is operating at full employment. Which statement is TRUE when the size of the budget deficit decreases?

Accepted Answer

A) The interest rate will decrease, leading to an increase in investment and capital formation. 
B) Demand and supply of credit will increase. 
C) A reduction in the growth of productivity, and a reduction in society's standard of living will occur. 
D) The increased amount of public goods will crowd out privately produced goods. 
A) The interest rate will decrease, leading to an increase in investment and capital formation. 
B) Demand and supply of credit will increase. 
C) A reduction in the growth of productivity, and a reduction in society's standard of living will occur. 
D) The increased amount of public goods will crowd out privately produced goods.

Question 20

Since 1940, the U.S. government has experienced

Accepted Answer

A) about the same number of years with budget deficits as with budget surpluses. 
B) twice as many annual budget surpluses as annual budget deficits. 
C) only one year with a budget surplus. 
D) many more budget deficits than budget surpluses. 
A) about the same number of years with budget deficits as with budget surpluses. 
B) twice as many annual budget surpluses as annual budget deficits. 
C) only one year with a budget surplus. 
D) many more budget deficits than budget surpluses.

By approximately how much would the federal government have to raise each worker's annual taxes to eliminate the current federal budget deficit?

Which of the following has NOT been proposed as a possible economic solution to reducing the government deficit?

If the government has no debt initially, but then has annual revenues of $10 billion per year for 4 years and annual expenditures of $10.5 billion per year for 4 years, then the government has

The difference between gross public debt and net public debt is that

Historical evidence seems to indicate that

Which of the following statements has usually held TRUE about the relationship between the trade deficits and government budget deficits?

Expressing the U.S. federal budget deficit as a percentage of Gross Domestic Product (GDP)

When was the last year the United States had a budget surplus?

Suppose the economy is initially experiencing a short-run recessionary gap. An increase in the size of the budget deficit will

A federal deficit of $300 billion means that

The total value of all outstanding federal government securities is called

When foreign residents buy U.S. Treasury securities to finance the budget deficit

Politicians have suggested that the budget deficit could be reduced by

Which of the following is the best measure of the total amount that the federal government owes to private owners of U.S. Treasury securities?

Explain the differences between the public debt and the government budget deficit.

Gross public debt minus all government interagency borrowing is

If the government's spending exactly equals its revenues during a budget year, that government is

Assume the economy is closed and that it is operating at full employment. Which statement is TRUE when the size of the budget deficit decreases?

Since 1940, the U.S. government has experienced

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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Exam 13: Deficit Spending and the Public Debt

By approximately how much would the federal government have to raise each worker's annual taxes to eliminate the current federal budget deficit?

Which of the following has NOT been proposed as a possible economic solution to reducing the government deficit?

If the government has no debt initially, but then has annual revenues of $10 billion per year for 4 years and annual expenditures of $10.5 billion per year for 4 years, then the government has

The difference between gross public debt and net public debt is that

Historical evidence seems to indicate that

Which of the following statements has usually held TRUE about the relationship between the trade deficits and government budget deficits?

Expressing the U.S. federal budget deficit as a percentage of Gross Domestic Product (GDP)

When was the last year the United States had a budget surplus?

Suppose the economy is initially experiencing a short-run recessionary gap. An increase in the size of the budget deficit will

A federal deficit of $300 billion means that

The total value of all outstanding federal government securities is called

When foreign residents buy U.S. Treasury securities to finance the budget deficit

Politicians have suggested that the budget deficit could be reduced by

Which of the following is the best measure of the total amount that the federal government owes to private owners of U.S. Treasury securities?

Explain the differences between the public debt and the government budget deficit.

Gross public debt minus all government interagency borrowing is

If the government's spending exactly equals its revenues during a budget year, that government is

Assume the economy is closed and that it is operating at full employment. Which statement is TRUE when the size of the budget deficit decreases?

Since 1940, the U.S. government has experienced

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters