Exam 13: Fiscal Policy, Deficits, and Debt

The built-in stabilizers in the economy tend to:

A Federal budget deficit exists when:

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

The bursting of the Dot.com bubble in 2000, along with the terrorist attacks in 2001, made the U.S. government:

The table below shows the cyclically-adjusted budget deficit as a percentage of GDP over a five-year period. Refer to the information above. In which year was fiscal policy turning more expansionary?

A large public debt would not bankrupt the Federal government because it can refinance the debt or increase taxes to pay the debt.

Of the U.S. Federal debt held by foreigners in 2012, China held roughly:

If people expected that a fiscal policy in the form of a tax cut was temporary, then this policy's effect on the economy will tend to be:

The crowding-out effect tends to be stronger when the economy:

Refer to the data in the table above. In which year was the cyclical deficit the largest?

Through the start of 2009, Social Security revenues exceeded payouts, and the excess inflow was used to buy:

The flexibility of the price level tends to dampen the multiplier effect of fiscal policy.

In 2012, foreign ownership of the total public debt of the U.S. was about:

An increase in the public debt and its subsequent repayment will tend to:

Actions by the Federal government that decrease the progressivity of the tax system:

The crowding-out effect suggests that:

Refer to the data in the table above. The direction of fiscal policy became more expansionary from:

The crowding-out effect from government borrowing to finance the public debt is reduced when:

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

If the economy is in a recession and prices are relatively stable, then the discretionary fiscal policy or policies that would most likely be recommended to correct this macroeconomic problem would be: