Exam 32: Budget Deficits in the Short and Long Run

A budget deficit is best defined as the

What happens typically to a budget deficit during a recession?

In the late 1990s, the more than expected increases in tax revenues were the result of

What is the difference between the deficit and the debt?

If the President and Congress agree to balance the budget during a recession, then the appropriate monetary policy is

Lower deficits should lead to higher levels of private investment spending.

The structural deficit can be used to estimate the thrust of current fiscal policy.

If the Fed is increasing its holdings of government bonds at the same time the federal deficit is increasing,

The argument that budget deficits are inflationary is

National debt is the federal government's total indebtedness at a moment in time.

When (if at all) are budget deficits inflationary?

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

Crowding in occurs when government spending, by raising Real GDP, induces increases in private investment spending.

The portion of national debt owned by foreigners does constitute a burden on the nation as a whole.

If you wanted to measure changes in fiscal policy intentions, you should use the

Composition of aggregate demand is a major determinant of the economy's long-run economic growth rate.

Figure 32-2 Assume that a contractionary monetary policy has shifted the aggregate demand curve in Figure 32-2 from D₀D₀ to D₁D₁. Fiscal authorities who wish to restore real GDP to the full-employment level will

Figure 32-2 Suppose that Figure 32-2 shows the effects of reducing the budget deficit by raising taxes. If authorities do not want real GDP to fall, monetary policy must

Most economists agree that the focus of fiscal policy is to

From 2004 to 2008, the federal budget deficit, on an official fiscal-year basis, was