Exam 14: Deficit Spending and the Public Debt

Suppose the economy is initially operating at full employment. A reduction in the size of the budget deficit will cause which of the following in the short run?

Why is it unlikely that tax increases will be the way to eliminate current U.S. federal budget deficits?

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

Suppose that the government of Summerfield spends $2 trillion in 2013 and receives tax revenues of $1.5 trillion. Which of the following is true?

Explain how deficit spending can benefit future generations.

If the government has a spending flow that exceeds the revenues it collects, the government will run a ________ that year.

As a possible approach to eliminating the government budget deficit, increasing taxes for everyone would

Explain how deficit spending could be a burden to future generations.

In the short run, a fiscal policy action that results in a reduction in the size of the budget deficit will cause

Among economists, it is generally believed that

-Suppose that initially there is no public debt. Using the above table, what is the public debt as a percentage of GDP in Year 3?

While the budget deficit represents a ________, the public debt represents a ________.

-Suppose that initially there is no public debt. Using the above table, the public debt over this four year period would have

Politicians have suggested that the budget deficit could be reduced by

Gross public debt is

Media reports often suggest that the increasing public debt is a burden on future generations. What they mean is that

The total value of all outstanding federal government securities is

In which decade did the United States begin experiencing large trade deficits?

One mechanism through which increasing public debt may impact the economy is that the resulting

Legislated federal government payments that anyone who qualifies can receive are called