Question 1

​The crowding in of private investment is associated with:

Accepted Answer

A) a leftward shift of the aggregate demand curve for an economy. 
B) a leftward shift of the aggregate supply curve of an economy. 
C) a reduction in the level of government spending. 
D) a reduction in corporate income taxes. 
E) an increase in aggregate demand induced by increased government borrowing. 
A) a leftward shift of the aggregate demand curve for an economy. 
B) a leftward shift of the aggregate supply curve of an economy. 
C) a reduction in the level of government spending. 
D) a reduction in corporate income taxes. 
E) an increase in aggregate demand induced by increased government borrowing. E

Question 2

​Because of automatic stabilizers,_____.

Accepted Answer

A) fiscal policy focuses on maintaining an annually balanced budget 
B) planning discretionary fiscal measures to reduce economic fluctuations is easy 
C) government budget deficits are zero if averaged out over the entire business cycle 
D) policy makers should be concerned less with balancing the budget annually 
E) government budget deficits are smaller during expansions and larger during contractions 
A) fiscal policy focuses on maintaining an annually balanced budget 
B) planning discretionary fiscal measures to reduce economic fluctuations is easy 
C) government budget deficits are zero if averaged out over the entire business cycle 
D) policy makers should be concerned less with balancing the budget annually 
E) government budget deficits are smaller during expansions and larger during contractions E

Question 3

Some economists argue that federal government capital projects,which offer benefits over a number of years,should be financed through deficit financing.​

Accepted Answer

A) True 
 B)False  True

Question 4

The key link between the twin deficits involves:​

Accepted Answer

A) higher interest rates and a stronger dollar. 
B) lower interest rates and a stronger dollar. 
C) higher interest rates and a weaker dollar. 
D) lower interest rates and larger trade deficits 
E) higher interest rates leading to more exports. 
A) higher interest rates and a stronger dollar. 
B) lower interest rates and a stronger dollar. 
C) higher interest rates and a weaker dollar. 
D) lower interest rates and larger trade deficits 
E) higher interest rates leading to more exports.

Question 5

The federal budget has been in deficit in all but 9 years since 1960.​

Accepted Answer

A) True 
 B)False

Question 6

The U.S.federal budget is determined exclusively by Congress.​

Accepted Answer

A) True 
 B)False

Question 7

​If a budget is cyclically balanced,the government should run a surplus when the economy experiences a contractionary gap.

Accepted Answer

A) True 
 B)False

Question 8

Increases in the fraction of national debt held by foreigners _____ the burden of debt service on future generations _____.​

Accepted Answer

A) decrease; because it is easier for the borrowing nation to default on the debt 
B) decrease; but may make the country more vulnerable to foreign intervention 
C) decrease; because debt servicing accomplished by increases in the money supply is not as inflationary as it would be if all debt were held domestically 
D) increase; because taxes to repay the debt are collected within the country but more interest payments on the debt are sent outside 
E) increase; because foreign bondholding pushes up interest rates at the date of issue,increasing crowding out 
A) decrease; because it is easier for the borrowing nation to default on the debt 
B) decrease; but may make the country more vulnerable to foreign intervention 
C) decrease; because debt servicing accomplished by increases in the money supply is not as inflationary as it would be if all debt were held domestically 
D) increase; because taxes to repay the debt are collected within the country but more interest payments on the debt are sent outside 
E) increase; because foreign bondholding pushes up interest rates at the date of issue,increasing crowding out

Question 9

​Which of the following is true of the federal budget process in the U.S.?

Accepted Answer

A) Congress must approve a budget with at least a two-thirds majority vote. 
B) The federal budget must be balanced each year because the volume of international trade reduces if the government has a surplus or a deficit. 
C) Most federal outlays are determined by existing laws. 
D) Congress approves a budget that separates the capital budget and the operating budget. 
E) Detailed budgeting allows the party in power to reward supporters. 
A) Congress must approve a budget with at least a two-thirds majority vote. 
B) The federal budget must be balanced each year because the volume of international trade reduces if the government has a surplus or a deficit. 
C) Most federal outlays are determined by existing laws. 
D) Congress approves a budget that separates the capital budget and the operating budget. 
E) Detailed budgeting allows the party in power to reward supporters.

Question 10

​A possible explanation for the persistence of the U.S.federal budget deficits is that:

Accepted Answer

A) it is easier politically to increase government spending than to decrease taxes. 
B) it is easier politically to decrease government spending than to decrease taxes. 
C) it is easier politically to increase government spending than to increase taxes. 
D) the economy naturally tends toward recessions. 
E) the economy naturally tends toward full employment. 
A) it is easier politically to increase government spending than to decrease taxes. 
B) it is easier politically to decrease government spending than to decrease taxes. 
C) it is easier politically to increase government spending than to increase taxes. 
D) the economy naturally tends toward recessions. 
E) the economy naturally tends toward full employment.

Question 11

Which of the following steps does not belong to the sequence of events reflecting the finance of a large government budget deficit?​

Accepted Answer

A) The U.S.Treasury sells securities. 
B) The sale of securities drives up interest rates. 
C) Attracted by the high interest rates,foreigners purchase dollars in order to invest in the U.S. 
D) Greater demand for the dollar increases its value relative to other currencies. 
E) The rising value of the dollar leads to increased U.S.exports and reduced U.S.imports. 
A) The U.S.Treasury sells securities. 
B) The sale of securities drives up interest rates. 
C) Attracted by the high interest rates,foreigners purchase dollars in order to invest in the U.S. 
D) Greater demand for the dollar increases its value relative to other currencies. 
E) The rising value of the dollar leads to increased U.S.exports and reduced U.S.imports.

Question 12

​A disadvantage of functional finance is that it:

Accepted Answer

A) does not focus on producing the potential level of output in an economy. 
B) increases the level of unemployment during recessions. 
C) allows chronic deficits that magnify into national debt,allowing it to reach an alarming level. 
D) requires that the budget is balanced even during times of war. 
E) magnifies fluctuations in the business cycle. 
A) does not focus on producing the potential level of output in an economy. 
B) increases the level of unemployment during recessions. 
C) allows chronic deficits that magnify into national debt,allowing it to reach an alarming level. 
D) requires that the budget is balanced even during times of war. 
E) magnifies fluctuations in the business cycle.

Question 13

​Government spending shrank the most in _____ relative to GDP between 1997 and 2016.​

Accepted Answer

A) Canada 
B) Australia 
C) Germany 
D) Spain 
E) the U.K. 
A) Canada 
B) Australia 
C) Germany 
D) Spain 
E) the U.K.

Question 14

The U.S.federal debt as a percentage of GDP is currently on the rise.​

Accepted Answer

A) True 
 B)False

Question 15

If the functional finance approach to federal budgeting is followed,the federal government's budget deficit should be zero.​

Accepted Answer

A) True 
 B)False

Question 16

The Budget Enforcement Act of 1990:​

Accepted Answer

A) was a package of spending cuts and tax increases designed to reduce budget deficit. 
B) succeeded in balancing the budget cyclically. 
C) succeeded in balancing the budget within two years. 
D) identified defense and international programs as the only two areas of potential spending cuts. 
E) gave the President the authority to make unilateral spending cuts to balance the budget. 
A) was a package of spending cuts and tax increases designed to reduce budget deficit. 
B) succeeded in balancing the budget cyclically. 
C) succeeded in balancing the budget within two years. 
D) identified defense and international programs as the only two areas of potential spending cuts. 
E) gave the President the authority to make unilateral spending cuts to balance the budget.

Question 17

​Until 1980,the national debt was mostly the result of:

Accepted Answer

A) wartime borrowing. 
B) inflation. 
C) bad monetary policy. 
D) wasteful Congressional spending. 
E) Social Security obligations. 
A) wartime borrowing. 
B) inflation. 
C) bad monetary policy. 
D) wasteful Congressional spending. 
E) Social Security obligations.

Question 18

​Which of the following is not a form of crowding out?

Accepted Answer

A) Lower household spending due to higher interest rates 
B) Lower business spending due to higher interest rates 
C) Lower net exports due to higher interest rates 
D) Lower private spending due to higher taxes 
E) Greater output and employment in the short run 
A) Lower household spending due to higher interest rates 
B) Lower business spending due to higher interest rates 
C) Lower net exports due to higher interest rates 
D) Lower private spending due to higher taxes 
E) Greater output and employment in the short run

Question 19

Nearly half of the publicly held U.S.federal debt are held by foreigners.​

Accepted Answer

A) True 
 B)False

Question 20

​The federal budget is:

Accepted Answer

A) submitted by Congress to the President and contains proposals for tax increases. 
B) submitted by Congress to the President and contains proposals for government expenditures. 
C) always in balance,with receipts equal to expenditures. 
D) equal to government purchases plus cash and in-kind transfer payments. 
E) usually planned for the calendar year,which starts from January. 
A) submitted by Congress to the President and contains proposals for tax increases. 
B) submitted by Congress to the President and contains proposals for government expenditures. 
C) always in balance,with receipts equal to expenditures. 
D) equal to government purchases plus cash and in-kind transfer payments. 
E) usually planned for the calendar year,which starts from January.

The crowding in of private investment is associated with:

Because of automatic stabilizers,_____.

Some economists argue that federal government capital projects,which offer benefits over a number of years,should be financed through deficit financing.

The key link between the twin deficits involves:

The federal budget has been in deficit in all but 9 years since 1960.

The U.S.federal budget is determined exclusively by Congress.

If a budget is cyclically balanced,the government should run a surplus when the economy experiences a contractionary gap.

Increases in the fraction of national debt held by foreigners _ the burden of debt service on future generations _.

Which of the following is true of the federal budget process in the U.S.?

A possible explanation for the persistence of the U.S.federal budget deficits is that:

Which of the following steps does not belong to the sequence of events reflecting the finance of a large government budget deficit?

A disadvantage of functional finance is that it:

Government spending shrank the most in _____ relative to GDP between 1997 and 2016.

The U.S.federal debt as a percentage of GDP is currently on the rise.

If the functional finance approach to federal budgeting is followed,the federal government's budget deficit should be zero.

The Budget Enforcement Act of 1990:

Until 1980,the national debt was mostly the result of:

Which of the following is not a form of crowding out?

Nearly half of the publicly held U.S.federal debt are held by foreigners.

The federal budget is:

The Art and Science of Economic Analysis

Economic Tools and Economic Systems

Economic Decision Makers

Demand, supply, and Markets

Introduction to Macroeconomics

Tracking the Useconomy

Unemployment and Inflation

Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

Filters

Exam 12: Federal Budgets and Public Policy

​The crowding in of private investment is associated with:

​Because of automatic stabilizers,_____.

Some economists argue that federal government capital projects,which offer benefits over a number of years,should be financed through deficit financing.​

The key link between the twin deficits involves:​

The federal budget has been in deficit in all but 9 years since 1960.​

The U.S.federal budget is determined exclusively by Congress.​

​If a budget is cyclically balanced,the government should run a surplus when the economy experiences a contractionary gap.

Increases in the fraction of national debt held by foreigners _____ the burden of debt service on future generations _____.​

​Which of the following is true of the federal budget process in the U.S.?

​A possible explanation for the persistence of the U.S.federal budget deficits is that:

Which of the following steps does not belong to the sequence of events reflecting the finance of a large government budget deficit?​

​A disadvantage of functional finance is that it:

​Government spending shrank the most in _____ relative to GDP between 1997 and 2016.​

The U.S.federal debt as a percentage of GDP is currently on the rise.​

If the functional finance approach to federal budgeting is followed,the federal government's budget deficit should be zero.​

The Budget Enforcement Act of 1990:​

​Until 1980,the national debt was mostly the result of:

​Which of the following is not a form of crowding out?

Nearly half of the publicly held U.S.federal debt are held by foreigners.​

​The federal budget is:

The Art and Science of Economic Analysis

Economic Tools and Economic Systems

Economic Decision Makers

Demand, supply, and Markets

Introduction to Macroeconomics

Tracking the Useconomy

Unemployment and Inflation

Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

Filters

The crowding in of private investment is associated with:

Because of automatic stabilizers,_____.

Some economists argue that federal government capital projects,which offer benefits over a number of years,should be financed through deficit financing.

The key link between the twin deficits involves:

The federal budget has been in deficit in all but 9 years since 1960.

The U.S.federal budget is determined exclusively by Congress.

If a budget is cyclically balanced,the government should run a surplus when the economy experiences a contractionary gap.

Increases in the fraction of national debt held by foreigners _ the burden of debt service on future generations _.

Which of the following is true of the federal budget process in the U.S.?

A possible explanation for the persistence of the U.S.federal budget deficits is that:

Which of the following steps does not belong to the sequence of events reflecting the finance of a large government budget deficit?

A disadvantage of functional finance is that it:

Government spending shrank the most in _____ relative to GDP between 1997 and 2016.

The U.S.federal debt as a percentage of GDP is currently on the rise.

If the functional finance approach to federal budgeting is followed,the federal government's budget deficit should be zero.

The Budget Enforcement Act of 1990:

Until 1980,the national debt was mostly the result of:

Which of the following is not a form of crowding out?

Nearly half of the publicly held U.S.federal debt are held by foreigners.

The federal budget is: