Question 1

The portion of US debt owned by various government trust funds

Accepted Answer

A) peaked in the 2010 
B) continues to rise 
C) dropped to an all-time low in 2015 
D) has remained constant (by law) 
A) peaked in the 2010 
B) continues to rise 
C) dropped to an all-time low in 2015 
D) has remained constant (by law)

Question 2

Compared to Italy and Japan in recent years, the debt as a percentage of GDP in the US is

Accepted Answer

A) substantially greater. 
B) slightly smaller. 
C) substantially smaller. 
D) roughly equal. 
A) substantially greater. 
B) slightly smaller. 
C) substantially smaller. 
D) roughly equal.

Question 3

A budget deficit is the

Accepted Answer

A) amount by which revenues exceed expenditures. 
B) total amount owed by the federal government. 
C) amount by which revenues fall short of projections. 
D) amount by which expenditures exceed revenues. 
A) amount by which revenues exceed expenditures. 
B) total amount owed by the federal government. 
C) amount by which revenues fall short of projections. 
D) amount by which expenditures exceed revenues.

Question 4

Projections of the deficit, surplus and debt picture are

Accepted Answer

A) usually accurate as many as thirty years out. 
B) rarely accurate even year to year. 
C) highly sensitive to changes in the economy. 
D) rarely accurate even year to year and are highly sensitive to changes in the economy. 
A) usually accurate as many as thirty years out. 
B) rarely accurate even year to year. 
C) highly sensitive to changes in the economy. 
D) rarely accurate even year to year and are highly sensitive to changes in the economy.

Question 5

Which of the following events occurred during the 2000 to 2003 time-frame and had an important impact on the deficit/surplus projections?

Accepted Answer

A) The recession of 2001. 
B) The increase in interest rates from 2001 to 2003. 
C) The increase in inflation rates from 2000 to 2002. 
D) The decrease in unemployment rates from 2002 to 2003. 
A) The recession of 2001. 
B) The increase in interest rates from 2001 to 2003. 
C) The increase in inflation rates from 2000 to 2002. 
D) The decrease in unemployment rates from 2002 to 2003.

Question 6

Following the financial collapse in late 2008, the deficit increased in part because of the

Accepted Answer

A) weakened state of the economy caused increased spending on unemployment compensation. 
B) high short-term interest rates and restrictive monetary policy. 
C) U)S. return to the gold standard. 
D) massive expansion of foreign aid to Central American democracies. 
A) weakened state of the economy caused increased spending on unemployment compensation. 
B) high short-term interest rates and restrictive monetary policy. 
C) U)S. return to the gold standard. 
D) massive expansion of foreign aid to Central American democracies.

Question 7

Most economists would place the costs of food for soldiers in the

Accepted Answer

A) operating budget. 
B) entitlement budget. 
C) capital budget. 
D) food stamp budget. 
A) operating budget. 
B) entitlement budget. 
C) capital budget. 
D) food stamp budget.

Question 8

If a Balanced Budget Amendment to the U.S. Constitution were passed, during an economic slowdown, such an amendment would

Accepted Answer

A) help policymakers respond effectively 
B) tie the hands of policymakers but at least not force them into counterproductive policies 
C) force policymakers into counterproductive policies 
D) have little impact on policymakers. 
A) help policymakers respond effectively 
B) tie the hands of policymakers but at least not force them into counterproductive policies 
C) force policymakers into counterproductive policies 
D) have little impact on policymakers.

Question 9

Prior to 1950, for most of the years in which there were deficits we were also

Accepted Answer

A) under Republican Presidents. 
B) at war. 
C) under Democratic Presidents. 
D) in financial panics or depressions. 
A) under Republican Presidents. 
B) at war. 
C) under Democratic Presidents. 
D) in financial panics or depressions.

Question 10

If monetary policy is unchanged, the outstanding national debt will increase whenever

Accepted Answer

A) government tax receipts exceed government spending. 
B) there is a deficit in the federal budget. 
C) Social Security tax receipts exceed Social Security benefit payments. 
D) there is a surplus in the federal budget. 
A) government tax receipts exceed government spending. 
B) there is a deficit in the federal budget. 
C) Social Security tax receipts exceed Social Security benefit payments. 
D) there is a surplus in the federal budget.

Question 11

The portion of US debt owned by the public (non-Federal Reserve)

Accepted Answer

A) Dropped from the 1940s through the 1970s, spiked in the 1980s, dropped in the 1990s and early 2000, and rose in the 2010s 
B) continues to fall 
C) dropped to an all-time low in 2015 
D) rose from around 6% to around 12% as a result of the Great Recession 
A) Dropped from the 1940s through the 1970s, spiked in the 1980s, dropped in the 1990s and early 2000, and rose in the 2010s 
B) continues to fall 
C) dropped to an all-time low in 2015 
D) rose from around 6% to around 12% as a result of the Great Recession

Question 12

The amount of US debt owned by the Japanese

Accepted Answer

A) Dropped from the 1940s through the 1970s, spiked in the 1980s, dropped in the 1990s and early 2000, and rose in the 2010s 
B) continues to rise 
C) dropped to an all-time low in 2015 
D) fell as a result of the Great Recession 
A) Dropped from the 1940s through the 1970s, spiked in the 1980s, dropped in the 1990s and early 2000, and rose in the 2010s 
B) continues to rise 
C) dropped to an all-time low in 2015 
D) fell as a result of the Great Recession

Question 13

Following the financial collapse in late 2008, the deficit increased in part because of the

Accepted Answer

A) U)S. return to the gold standard. 
B) weakened state of the economy caused tax revenues to slow. 
C) massive expansion of foreign aid to Central American democracies. 
D) high short-term interest rates and restrictive monetary policy. 
A) U)S. return to the gold standard. 
B) weakened state of the economy caused tax revenues to slow. 
C) massive expansion of foreign aid to Central American democracies. 
D) high short-term interest rates and restrictive monetary policy.

Question 14

In which of the decades below was the deficit as a percentage of GDP the largest?

Accepted Answer

A) The 1940s. 
B) The 1950s. 
C) The 1960s. 
D) The1970s. 
A) The 1940s. 
B) The 1950s. 
C) The 1960s. 
D) The1970s.

Question 15

During the record deficits of the 1980s, the off-budget elements were

Accepted Answer

A) also in record deficit territory. 
B) in surplus. 
C) in deficit, but only barely. 
D) fluctuating annually between surpluses and deficits. 
A) also in record deficit territory. 
B) in surplus. 
C) in deficit, but only barely. 
D) fluctuating annually between surpluses and deficits.

Question 16

In which of the decades below was the inflation-adjusted deficit largest?

Accepted Answer

A) The 1940s. 
B) The 1950s. 
C) The 1960s. 
D) The 1970s. 
A) The 1940s. 
B) The 1950s. 
C) The 1960s. 
D) The 1970s.

Question 17

As a percentage of GDP the national debt consistently

Accepted Answer

A) rose from 1975 to 1995. 
B) rose from 1950 to 1960 but not thereafter. 
C) rose from 1950 to 1975. 
D) fell from 1950 until 1990. 
A) rose from 1975 to 1995. 
B) rose from 1950 to 1960 but not thereafter. 
C) rose from 1950 to 1975. 
D) fell from 1950 until 1990.

Question 18

The budget deficit/surplus projections for 2005 that were made in 2001 were wrong by

Accepted Answer

A) less than a billion. 
B) several trillion. 
C) several hundred billion. 
D) several hundred trillion. 
A) less than a billion. 
B) several trillion. 
C) several hundred billion. 
D) several hundred trillion.

Question 19

The projections by the Congressional Budget Office and the Office of Management and Budget for deficits are

Accepted Answer

A) usually right on target even ten years out into the future. 
B) typically off target even though most of what affects the deficit is easily forecast. 
C) typically off target because most of what affects the deficit is not easily forecast. 
D) always too low suggesting that both are using wishful thinking rather than analysis. 
A) usually right on target even ten years out into the future. 
B) typically off target even though most of what affects the deficit is easily forecast. 
C) typically off target because most of what affects the deficit is not easily forecast. 
D) always too low suggesting that both are using wishful thinking rather than analysis.

Question 20

An increasing portion of the U.S. national debt is held by

Accepted Answer

A) the public. 
B) the Federal Reserve. 
C) government trust funds. 
D) the public and the Federal Reserve. 
A) the public. 
B) the Federal Reserve. 
C) government trust funds. 
D) the public and the Federal Reserve.

Exam 12: Federal Deficits, Surpluses, and the National Debt

The portion of US debt owned by various government trust funds

Compared to Italy and Japan in recent years, the debt as a percentage of GDP in the US is

A budget deficit is the

Projections of the deficit, surplus and debt picture are

Which of the following events occurred during the 2000 to 2003 time-frame and had an important impact on the deficit/surplus projections?

Following the financial collapse in late 2008, the deficit increased in part because of the

Most economists would place the costs of food for soldiers in the

If a Balanced Budget Amendment to the U.S. Constitution were passed, during an economic slowdown, such an amendment would

Prior to 1950, for most of the years in which there were deficits we were also

If monetary policy is unchanged, the outstanding national debt will increase whenever

The portion of US debt owned by the public (non-Federal Reserve)

The amount of US debt owned by the Japanese

Following the financial collapse in late 2008, the deficit increased in part because of the

In which of the decades below was the deficit as a percentage of GDP the largest?

During the record deficits of the 1980s, the off-budget elements were

In which of the decades below was the inflation-adjusted deficit largest?

As a percentage of GDP the national debt consistently

The budget deficit/surplus projections for 2005 that were made in 2001 were wrong by

The projections by the Congressional Budget Office and the Office of Management and Budget for deficits are

An increasing portion of the U.S. national debt is held by

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