Question 1

When the economy has substantial additional saving,deficit spending will have a large "crowding out" effect.

Accepted Answer

A) True 
 B)False

Question 2

Argentina in 2001 faced a debt problem more serious than the U.S.debt problem because Argentina was obligated to repay its debt in

Accepted Answer

A)  U.S.dollars. 
B)  their own currencies. 
C)  a relatively short period of time. 
D)  large installments. 
A)  U.S.dollars. 
B)  their own currencies. 
C)  a relatively short period of time. 
D)  large installments.

Question 3

If the national debt is owed entirely to U.S.citizens,

Accepted Answer

A)  paying off the debt will necessarily stimulate growth. 
B)  future interest payments on the debt are not a burden to the nation as a whole. 
C)  future economic growth will necessarily be slowed. 
D)  the debt constitutes a burden to these citizens. 
A)  paying off the debt will necessarily stimulate growth. 
B)  future interest payments on the debt are not a burden to the nation as a whole. 
C)  future economic growth will necessarily be slowed. 
D)  the debt constitutes a burden to these citizens.

Question 4

The argument that the national debt imposes a burden on future generations becomes more compelling as

Accepted Answer

A)  the percentage of the national debt held by foreigners rises. 
B)  tax rates rise. 
C)  interest rates fall. 
D)  debt service payments (interest)rise. 
A)  the percentage of the national debt held by foreigners rises. 
B)  tax rates rise. 
C)  interest rates fall. 
D)  debt service payments (interest)rise.

Question 5

A constitutional amendment requiring an annually balanced budget would help stabilize the economy.

Accepted Answer

A) True 
 B)False

Question 6

A chart of the ratio of national debt to GDP from 1915 to 2014 would show

Accepted Answer

A)  a continuous decline. 
B)  sharp increases from 1945 to 1975. 
C)  significant increases from 1983 to 1994. 
D)  significant decreases from 2003 to 2010. 
A)  a continuous decline. 
B)  sharp increases from 1945 to 1975. 
C)  significant increases from 1983 to 1994. 
D)  significant decreases from 2003 to 2010.

Question 7

Contractionary fiscal policies used to reduce the deficit in the 1990s did not hurt the economy because fiscal and monetary policies were well coordinated at that time.

Accepted Answer

A) True 
 B)False

Question 8

A chart of the ratio of national debt to GDP from 1915 to 2014 would show

Accepted Answer

A)  significant increases from 1945 to 1975. 
B)  significant increases during World Wars I and II. 
C)  a larger value in 1975 compared to 1945. 
D)  significant increases from 1995 to 2003. 
A)  significant increases from 1945 to 1975. 
B)  significant increases during World Wars I and II. 
C)  a larger value in 1975 compared to 1945. 
D)  significant increases from 1995 to 2003.

Question 9

One measure of "ability to pay," the national debt is the debt to

Accepted Answer

A)  GDP ratio. 
B)  tax ratio. 
C)  spending ratio. 
D)  investment ratio. 
A)  GDP ratio. 
B)  tax ratio. 
C)  spending ratio. 
D)  investment ratio.

Question 10

In 2009,the U.S.had a budget deficit of approximately

Accepted Answer

A)  $161 billion. 
B)  $459 billion. 
C)  $800 billion. 
D)  $1.4 trillion. 
A)  $161 billion. 
B)  $459 billion. 
C)  $800 billion. 
D)  $1.4 trillion.

Question 11

Because the personal income tax is an automatic stabilizer,

Accepted Answer

A)  inflationary gaps are impossible. 
B)  the budget deficit grows during a recession. 
C)  the deficit needed to cure a recessionary gap increases. 
D)  the structural deficit grows during a recession. 
E)  All of the above are correct. 
A)  inflationary gaps are impossible. 
B)  the budget deficit grows during a recession. 
C)  the deficit needed to cure a recessionary gap increases. 
D)  the structural deficit grows during a recession. 
E)  All of the above are correct.

Question 12

Regarding structural deficits,which of the following assertions is true?

Accepted Answer

A)  ​The structural deficit depends on the state of the economy. 
B)  ​The structural deficit is basded on actual expenditures and receipts. 
C)  ​The structural deficit change only when policy changes. 
D)  ​The structural deficit changes when GDP changes. 
A)  ​The structural deficit depends on the state of the economy. 
B)  ​The structural deficit is basded on actual expenditures and receipts. 
C)  ​The structural deficit change only when policy changes. 
D)  ​The structural deficit changes when GDP changes.

Question 13

In the early 1990s,economists became alarmed over the national debt because it

Accepted Answer

A)  was larger than three months' GDP. 
B)  was growing faster than GDP. 
C)  had reached twice the size of GDP. 
D)  was growing faster than private debt. 
A)  was larger than three months' GDP. 
B)  was growing faster than GDP. 
C)  had reached twice the size of GDP. 
D)  was growing faster than private debt.

Question 14

The crowding-out effect is likely to be the strongest during periods of

Accepted Answer

A)  recession. 
B)  large budget surpluses. 
C)  high employment. 
D)  expanding money supply. 
A)  recession. 
B)  large budget surpluses. 
C)  high employment. 
D)  expanding money supply.

Question 15

In 2010,the debt-to-GDP ratio increased to roughly the same ratio as the 1990s.

Accepted Answer

A) True 
 B)False

Question 16

The structural deficit/surplus budget

Accepted Answer

A)  measures the federal budget deficit/surplus as if the economy were at full employment. 
B)  measures the federal budget deficit/surplus as if the economy were in recession. 
C)  measures the federal budget deficit/surplus as if the economy were suffering from high inflation. 
D)  is used when structural unemployment is at a peak. 
A)  measures the federal budget deficit/surplus as if the economy were at full employment. 
B)  measures the federal budget deficit/surplus as if the economy were in recession. 
C)  measures the federal budget deficit/surplus as if the economy were suffering from high inflation. 
D)  is used when structural unemployment is at a peak.

Question 17

Compared to the size of GDP in 2014,the net national debt was approximately

Accepted Answer

A)  10% as large. 
B)  33% as large. 
C)  60% as large. 
D)  about twice as large. 
A)  10% as large. 
B)  33% as large. 
C)  60% as large. 
D)  about twice as large.

Question 18

If the economy is in a recessionary gap,and the government attempts to balance the budget,the effect will be to

Accepted Answer

A)  counteract the recession. 
B)  worsen and prolong the recession. 
C)  end the recession sooner. 
D)  increase the level of real GDP. 
A)  counteract the recession. 
B)  worsen and prolong the recession. 
C)  end the recession sooner. 
D)  increase the level of real GDP.

Question 19

Analogies between public and private debt are usually misleading.

Accepted Answer

A) True 
 B)False

Question 20

Most economists agree that the focus of fiscal policy is to

Accepted Answer

A)  plan the economy. 
B)  balance aggregate demand and aggregate supply. 
C)  balance the federal budget. 
D)  balance environmental needs and resources. 
A)  plan the economy. 
B)  balance aggregate demand and aggregate supply. 
C)  balance the federal budget. 
D)  balance environmental needs and resources.

When the economy has substantial additional saving,deficit spending will have a large "crowding out" effect.

Argentina in 2001 faced a debt problem more serious than the U.S.debt problem because Argentina was obligated to repay its debt in

If the national debt is owed entirely to U.S.citizens,

The argument that the national debt imposes a burden on future generations becomes more compelling as

A constitutional amendment requiring an annually balanced budget would help stabilize the economy.

A chart of the ratio of national debt to GDP from 1915 to 2014 would show

Contractionary fiscal policies used to reduce the deficit in the 1990s did not hurt the economy because fiscal and monetary policies were well coordinated at that time.

A chart of the ratio of national debt to GDP from 1915 to 2014 would show

One measure of "ability to pay," the national debt is the debt to

In 2009,the U.S.had a budget deficit of approximately

Because the personal income tax is an automatic stabilizer,

Regarding structural deficits,which of the following assertions is true?

In the early 1990s,economists became alarmed over the national debt because it

The crowding-out effect is likely to be the strongest during periods of

In 2010,the debt-to-GDP ratio increased to roughly the same ratio as the 1990s.

The structural deficit/surplus budget

Compared to the size of GDP in 2014,the net national debt was approximately

If the economy is in a recessionary gap,and the government attempts to balance the budget,the effect will be to

Analogies between public and private debt are usually misleading.

Most economists agree that the focus of fiscal policy is to

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Bringing In The Supply Side Unemployment and Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

Filters

Exam 16: Budget Deficits In The Short and Long Run

When the economy has substantial additional saving,deficit spending will have a large "crowding out" effect.

Argentina in 2001 faced a debt problem more serious than the U.S.debt problem because Argentina was obligated to repay its debt in

If the national debt is owed entirely to U.S.citizens,

The argument that the national debt imposes a burden on future generations becomes more compelling as

A constitutional amendment requiring an annually balanced budget would help stabilize the economy.

A chart of the ratio of national debt to GDP from 1915 to 2014 would show

Contractionary fiscal policies used to reduce the deficit in the 1990s did not hurt the economy because fiscal and monetary policies were well coordinated at that time.

A chart of the ratio of national debt to GDP from 1915 to 2014 would show

One measure of "ability to pay," the national debt is the debt to

In 2009,the U.S.had a budget deficit of approximately

Because the personal income tax is an automatic stabilizer,

Regarding structural deficits,which of the following assertions is true?

In the early 1990s,economists became alarmed over the national debt because it

The crowding-out effect is likely to be the strongest during periods of

In 2010,the debt-to-GDP ratio increased to roughly the same ratio as the 1990s.

The structural deficit/surplus budget

Compared to the size of GDP in 2014,the net national debt was approximately

If the economy is in a recessionary gap,and the government attempts to balance the budget,the effect will be to

Analogies between public and private debt are usually misleading.

Most economists agree that the focus of fiscal policy is to

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Bringing In The Supply Side Unemployment and Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

Filters