Question 1

Can deficits can have a positive effect on the economy?

Accepted Answer

A)  No, never. 
B)  Yes, in the short-run if the economy is at less than full employment. 
C)  Yes, in the long-run if the economy is at less than full employment. 
D)  Yes, in the short-run if the economy is at more than full employment. 
A)  No, never. 
B)  Yes, in the short-run if the economy is at less than full employment. 
C)  Yes, in the long-run if the economy is at less than full employment. 
D)  Yes, in the short-run if the economy is at more than full employment.

Question 2

A budget debt occurs when government expenditures exceed government revenues.

Accepted Answer

A) True 
 B)False

Question 3

Use of the budget surplus to increase government spending or to decrease taxes would increase aggregate demand.

Accepted Answer

A) True 
 B)False

Question 4

Suppose the government finances a budget deficit by issuing money (selling bonds to the Federal Reserve). This method of finance will:

Accepted Answer

A)  cause a significant decrease in investment due to higher interest rates. 
B)  cause aggregate demand to fall as households save more money in anticipation of higher future taxes that must eventually occur in order to repay the debt. 
C)  cause aggregate supply to increase due to increased investment. 
D)  cause a significant increase in aggregate demand because the expansionary effects of the deficit are enhanced by the expansionary effects of the increased supply of money. 
A)  cause a significant decrease in investment due to higher interest rates. 
B)  cause aggregate demand to fall as households save more money in anticipation of higher future taxes that must eventually occur in order to repay the debt. 
C)  cause aggregate supply to increase due to increased investment. 
D)  cause a significant increase in aggregate demand because the expansionary effects of the deficit are enhanced by the expansionary effects of the increased supply of money.

Can deficits can have a positive effect on the economy?

A budget debt occurs when government expenditures exceed government revenues.

Use of the budget surplus to increase government spending or to decrease taxes would increase aggregate demand.

Suppose the government finances a budget deficit by issuing money (selling bonds to the Federal Reserve). This method of finance will:

Economic Growth: an Introduction to Scarcity and Choice

An Introduction to Economic Systems and the Workings of the Price System

Competitive Markets and Government Policy: Agriculture

Efficiency in Resource Allocation: How Much Do We Have How Much Do We Want

Market Power: Does It Help or Hurt the Economy

Air Pollution: Balancing Benefits and Costs

Health Care: How Much for Whom

Crime and Drugs: a Modern Dilemma

College Education: Is It Worth the Cost

Educational Reform: the Role of Incentives and Choice

Poverty: Old and New Approaches to a Persistent Problem

Tracking and Explaining the Macroeconomy

Unemployment: the Legacy of Recession, Technological Change, and Free Choice

Inflation: a Monetary Phenomenon

Social Security: Leading Issues and Approaches to Reform

International Trade: Beneficial, but Controversial

Financing Trade and the Trade Deficit

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Exam 15: Sustained Budget Deficits: Is This Any Way to Run a Government

Can deficits can have a positive effect on the economy?

A budget debt occurs when government expenditures exceed government revenues.

Use of the budget surplus to increase government spending or to decrease taxes would increase aggregate demand.

Suppose the government finances a budget deficit by issuing money (selling bonds to the Federal Reserve). This method of finance will:

Economic Growth: an Introduction to Scarcity and Choice

An Introduction to Economic Systems and the Workings of the Price System

Competitive Markets and Government Policy: Agriculture

Efficiency in Resource Allocation: How Much Do We Have How Much Do We Want

Market Power: Does It Help or Hurt the Economy

Air Pollution: Balancing Benefits and Costs

Health Care: How Much for Whom

Crime and Drugs: a Modern Dilemma

College Education: Is It Worth the Cost

Educational Reform: the Role of Incentives and Choice

Poverty: Old and New Approaches to a Persistent Problem

Tracking and Explaining the Macroeconomy

Unemployment: the Legacy of Recession, Technological Change, and Free Choice

Inflation: a Monetary Phenomenon

Social Security: Leading Issues and Approaches to Reform

International Trade: Beneficial, but Controversial

Financing Trade and the Trade Deficit

Filters