Exam 13: Fiscal Policy, Deficits, and Debt

One important reason why the United States government is not likely to go bankrupt even with a large public debt is that it has:

Most of the U.S. public debt is owed to the nation's citizens and domestic institutions. This is one reason that the public debt:

The American Recovery and Reinvestment Act of 2009 included mostly:

When the U.S. economy reached full employment in 2007, the cyclically-adjusted deficit that year was -1.3% of GDP. From this information, we know that the:

The following is budget information for a hypothetical economy. All data are in billions of dollars. Refer to the above table. In which year is there a budget surplus?

If the cyclically-adjusted budget has a zero deficit but the actual budget has a $100 billion deficit, then that means that the government is pursuing an expansionary fiscal policy.

When the Federal government takes budgetary action to stimulate the economy or rein in inflation, such policy is:

The cyclically-adjusted surplus as a percentage of GDP is 1 percent in Year 1. This surplus becomes a deficit of 2 percent of GDP in Year 2. It can be concluded from Year 1 to Year 2 that:

The actual and cyclically-adjusted budgets will be equal when the economy is at full employment.

The set of fiscal policies that would be most contractionary would be a(n):

Which of the following fiscal policy changes would be the most contractionary?

The portion of the public debt owed to foreigners does not represent any real economic burden to Americans because we received money from foreigners when we incurred the debt.

Built-in stability is exemplified by the fact that with a progressive tax system, net tax revenues decrease when GDP decreases.

The United States is experiencing a recession and Congress decides to adopt an expansionary fiscal policy to stimulate the economy. In this case, the crowding-out effect suggests that investment spending would:

Assume that if there was no crowding-out, an increase in government spending would increase GDP by $100 billion. If there had been partial crowding-out, however, then GDP would have:

A given reduction in government spending will dampen demand-pull inflation by a greater amount when the:

The Social Security Program is designed to pay:

The last year when there was a surplus in the actual U.S. Federal budget was in:

A major concern with the Social Security trust fund is that:

More than half of the U.S. public debt is owed to Americans.