Question 1

The difference between the gross public debt and the net public debt is that the

Accepted Answer

A) gross public debt includes entitlements while the net public debt does not. 
B) gross public debt is based on budget deficit while the net public debt is not based on budget deficits. 
C) gross public debt includes government interagency borrowing while the net public debt does not. 
D) the gross public debt is expressed as a percentage of GDP while the net public debt is not. 
A) gross public debt includes entitlements while the net public debt does not. 
B) gross public debt is based on budget deficit while the net public debt is not based on budget deficits. 
C) gross public debt includes government interagency borrowing while the net public debt does not. 
D) the gross public debt is expressed as a percentage of GDP while the net public debt is not.

Question 2

Which of the following is a stock variable?

Accepted Answer

A) public debt 
B) wealth 
C) money supply 
D) all of the above 
A) public debt 
B) wealth 
C) money supply 
D) all of the above

Question 3

A government balanced budget is

Accepted Answer

A) an excess of government spending over government revenues during a given time period. 
B) a situation in which the government's spending is exactly equal to the total taxes and other revenues it collects during a given time period. 
C) the total value of all outstanding federal government securities. 
D) all federal government debt irrespective of who owns it. 
A) an excess of government spending over government revenues during a given time period. 
B) a situation in which the government's spending is exactly equal to the total taxes and other revenues it collects during a given time period. 
C) the total value of all outstanding federal government securities. 
D) all federal government debt irrespective of who owns it.

Question 4

If the government has no debt initially,but then has annual revenues of $10 billion per year for 4 years and annual expenditures of $10.5 billion per year for 4 years,then the government has

Accepted Answer

A) a budget surplus of $0.5 billion per year and a debt of $2 billion at the end of the 4 years. 
B) a budget deficit of $0.5 billion per year and a budget surplus of $2 billion at the end of the 4 years. 
C) a budget deficit of $0.5 billion per year and a debt of $2 billion at the end of the 4 years. 
D) a budget surplus of $0.5 billion per year and a surplus of $2 billion at the end of the 4 years. 
A) a budget surplus of $0.5 billion per year and a debt of $2 billion at the end of the 4 years. 
B) a budget deficit of $0.5 billion per year and a budget surplus of $2 billion at the end of the 4 years. 
C) a budget deficit of $0.5 billion per year and a debt of $2 billion at the end of the 4 years. 
D) a budget surplus of $0.5 billion per year and a surplus of $2 billion at the end of the 4 years.

Question 5

Other things being equal,during a period when the federal government issues more Treasury securities to borrow funds,

Accepted Answer

A) the flow of government expenditures during that period must exceed the flow of tax revenues. 
B) the flow of government expenditures during that period must exceed the stock of tax collections. 
C) the stock of government deficit spending during that period must exceed the flow of tax revenues. 
D) the stock of government deficit spending during that period must exceed the stock of tax collections. 
A) the flow of government expenditures during that period must exceed the flow of tax revenues. 
B) the flow of government expenditures during that period must exceed the stock of tax collections. 
C) the stock of government deficit spending during that period must exceed the flow of tax revenues. 
D) the stock of government deficit spending during that period must exceed the stock of tax collections.

Question 6

Which of the following statements is true about the difference between the public debt and the government budget deficit?

Accepted Answer

A) The public debt always increases while the government budget deficit may increase or decrease. 
B) The public debt for this year will increase or decrease depending upon whether there is a government budget deficit or a government budget surplus. 
C) The public debt is a flow measure and the government budget deficit is not a flow measure. 
D) There is no relationship between the public debt and the government budget deficit since one is a stock measure and the other is a flow measure. 
A) The public debt always increases while the government budget deficit may increase or decrease. 
B) The public debt for this year will increase or decrease depending upon whether there is a government budget deficit or a government budget surplus. 
C) The public debt is a flow measure and the government budget deficit is not a flow measure. 
D) There is no relationship between the public debt and the government budget deficit since one is a stock measure and the other is a flow measure.

Question 7

Net public debt is

Accepted Answer

A) the excess of annual government spending over annual tax revenues. 
B) the excess of annual tax revenues over annual government spending. 
C) the portion of government debt held by private individuals and firms. 
D) the sum owed by the public to keep the Social Security system afloat. 
A) the excess of annual government spending over annual tax revenues. 
B) the excess of annual tax revenues over annual government spending. 
C) the portion of government debt held by private individuals and firms. 
D) the sum owed by the public to keep the Social Security system afloat.

Question 8

Other things being equal,what is the effect of deficit spending on credit markets?

Accepted Answer

A) Both the demand for credit and the supply of credit will increase. 
B) Both the demand for credit and the supply of credit will decrease. 
C) The demand for credit increases while the supply of credit remains constant. 
D) The supply of credit will increase while the demand for credit remains the same. 
A) Both the demand for credit and the supply of credit will increase. 
B) Both the demand for credit and the supply of credit will decrease. 
C) The demand for credit increases while the supply of credit remains constant. 
D) The supply of credit will increase while the demand for credit remains the same.

Question 9

Net public debt is the

Accepted Answer

A) difference between tax revenues and government expenditures each year. 
B) sum of accumulated government deficits and surpluses held by individuals and businesses and foreign institutions. 
C) sum of accumulated government deficits and surpluses held by U.S.government agencies. 
D) sum of accumulated government deficits and surpluses held by large money center banks. 
A) difference between tax revenues and government expenditures each year. 
B) sum of accumulated government deficits and surpluses held by individuals and businesses and foreign institutions. 
C) sum of accumulated government deficits and surpluses held by U.S.government agencies. 
D) sum of accumulated government deficits and surpluses held by large money center banks.

Question 10

The long-run effect of increasing government budget deficits

Accepted Answer

A) is a redistribution of real GDP from privately provided goods to government provided goods. 
B) is no impact on equilibrium real GDP. 
C) is to increase of price level. 
D) all of the above 
A) is a redistribution of real GDP from privately provided goods to government provided goods. 
B) is no impact on equilibrium real GDP. 
C) is to increase of price level. 
D) all of the above

Question 11

A government budget deficit occurs during a budget year when

Accepted Answer

A) tax revenues > government spending. B) tax revenues = government spending. C) tax revenues < government spending. D) tax revenues + government spending = personal consumption. A) tax revenues > government spending. B) tax revenues = government spending. C) tax revenues < government spending. D) tax revenues + government spending = personal consumption.

Question 12

If the net public debt declined last year,then which of the following most likely occurred during that year?

Accepted Answer

A) The government's budget was balanced. 
B) The government experienced a budget surplus. 
C) The government experienced a budget deficit. 
D) The share of foreign holdings of the government's debt increased. 
A) The government's budget was balanced. 
B) The government experienced a budget surplus. 
C) The government experienced a budget deficit. 
D) The share of foreign holdings of the government's debt increased.

Question 13

Which of the following will NOT cause the public debt to change?

Accepted Answer

A) Collection by the government of $200 billion more in taxes than it spends 
B) Government budget deficit 
C) Government budget surplus 
D) Balanced budget 
A) Collection by the government of $200 billion more in taxes than it spends 
B) Government budget deficit 
C) Government budget surplus 
D) Balanced budget

Question 14

Which of the following is true when a budget deficit exists?

Accepted Answer

A) Government expenditures exceed tax revenues. 
B) Tax revenues exceed government expenditures. 
C) A trade surplus exists. 
D) Dissaving exists. 
A) Government expenditures exceed tax revenues. 
B) Tax revenues exceed government expenditures. 
C) A trade surplus exists. 
D) Dissaving exists.

Question 15

A government budget surplus is

Accepted Answer

A) a situation in which the supply of goods in the economy is greater than the demand for goods. 
B) a situation in which the amount spent by the government is greater than the amount collected in taxes. 
C) the public debt. 
D) an excess of revenues over government spending. 
A) a situation in which the supply of goods in the economy is greater than the demand for goods. 
B) a situation in which the amount spent by the government is greater than the amount collected in taxes. 
C) the public debt. 
D) an excess of revenues over government spending.

Question 16

Suppose that the federal government had a budget deficit of $80 billion in year 1 and $10 billion in year 2,but it had budget surpluses of $140 billion in year 3 and $20 billion in year 4.Also assume that the government uses any budget surpluses to pay down the public debt.At the end of these four years,the Federal government's public debt would have

Accepted Answer

A) decreased by $70 billion. 
B) increased by $250 billion. 
C) increased by $70 billion. 
D) decreased by $62.5 billion. 
A) decreased by $70 billion. 
B) increased by $250 billion. 
C) increased by $70 billion. 
D) decreased by $62.5 billion.

Question 17

Which of the following is true of the portion of the net public debt held by foreign residents?

Accepted Answer

A) It will definitely be a benefit to current and future generations of U.S residents,because foreign residents have shown a willingness to lend to the U.S.government in exchange for rates of return significantly lower than they can receive elsewhere in the world. 
B) It will definitely be a burden on current and future generations of U.S.residents who will have to pay interest on this portion of the debt,thereby transferring a portion of future U.S.incomes abroad. 
C) It will be a burden on future generations of U.S.residents only if funds that the U.S.government obtains from borrowing are expended on projects with rates of return lower than the rates of interest that the government pays foreign residents. 
D) It will be a benefit to future generations of U.S.residents only if funds that the U.S.government obtains from borrowing are expended on projects with rates of return lower than the rates of interest that the government pays foreign residents 
A) It will definitely be a benefit to current and future generations of U.S residents,because foreign residents have shown a willingness to lend to the U.S.government in exchange for rates of return significantly lower than they can receive elsewhere in the world. 
B) It will definitely be a burden on current and future generations of U.S.residents who will have to pay interest on this portion of the debt,thereby transferring a portion of future U.S.incomes abroad. 
C) It will be a burden on future generations of U.S.residents only if funds that the U.S.government obtains from borrowing are expended on projects with rates of return lower than the rates of interest that the government pays foreign residents. 
D) It will be a benefit to future generations of U.S.residents only if funds that the U.S.government obtains from borrowing are expended on projects with rates of return lower than the rates of interest that the government pays foreign residents

Question 18

Some economists believe that financing deficit spending by increasing taxes will lead to a lower level of national consumption and a higher level of national savings than deficit spending.The reason is

Accepted Answer

A) people believe that they can consume the government provided goods and have future generations pay the bill. 
B) that people do not realize that taxes have increased also. 
C) people will forgo private consumption now as society substitutes government goods for private goods. 
D) the interest rate on the debt will increase. 
A) people believe that they can consume the government provided goods and have future generations pay the bill. 
B) that people do not realize that taxes have increased also. 
C) people will forgo private consumption now as society substitutes government goods for private goods. 
D) the interest rate on the debt will increase.

Question 19

The gross public debt is the

Accepted Answer

A) amount of U.S.paper currency and coins in circulation. 
B) difference between current government expenditures and tax revenues. 
C) ratio of past deficits to past surpluses. 
D) total of all accumulated deficits and surpluses. 
A) amount of U.S.paper currency and coins in circulation. 
B) difference between current government expenditures and tax revenues. 
C) ratio of past deficits to past surpluses. 
D) total of all accumulated deficits and surpluses.

Question 20

If the government spends more than it receives in taxes during a given interval,then the result is

Accepted Answer

A) a balanced budget. 
B) the gross public debt. 
C) the net public debt. 
D) a government budget deficit. 
A) a balanced budget. 
B) the gross public debt. 
C) the net public debt. 
D) a government budget deficit.

The difference between the gross public debt and the net public debt is that the

Which of the following is a stock variable?

A government balanced budget is

If the government has no debt initially,but then has annual revenues of $10 billion per year for 4 years and annual expenditures of $10.5 billion per year for 4 years,then the government has

Other things being equal,during a period when the federal government issues more Treasury securities to borrow funds,

Which of the following statements is true about the difference between the public debt and the government budget deficit?

Net public debt is

Other things being equal,what is the effect of deficit spending on credit markets?

Net public debt is the

The long-run effect of increasing government budget deficits

A government budget deficit occurs during a budget year when

If the net public debt declined last year,then which of the following most likely occurred during that year?

Which of the following will NOT cause the public debt to change?

Which of the following is true when a budget deficit exists?

A government budget surplus is

Which of the following is true of the portion of the net public debt held by foreign residents?

Some economists believe that financing deficit spending by increasing taxes will lead to a lower level of national consumption and a higher level of national savings than deficit spending.The reason is

The gross public debt is the

If the government spends more than it receives in taxes during a given interval,then the result is

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, real GDP, and the Multiplier

Fiscal Policy

Money, banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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Exam 14: Deficit Spending and the Public Debt

The difference between the gross public debt and the net public debt is that the

Which of the following is a stock variable?

A government balanced budget is

If the government has no debt initially,but then has annual revenues of $10 billion per year for 4 years and annual expenditures of $10.5 billion per year for 4 years,then the government has

Other things being equal,during a period when the federal government issues more Treasury securities to borrow funds,

Which of the following statements is true about the difference between the public debt and the government budget deficit?

Net public debt is

Other things being equal,what is the effect of deficit spending on credit markets?

Net public debt is the

The long-run effect of increasing government budget deficits

A government budget deficit occurs during a budget year when

If the net public debt declined last year,then which of the following most likely occurred during that year?

Which of the following will NOT cause the public debt to change?

Which of the following is true when a budget deficit exists?

A government budget surplus is

Which of the following is true of the portion of the net public debt held by foreign residents?

Some economists believe that financing deficit spending by increasing taxes will lead to a lower level of national consumption and a higher level of national savings than deficit spending.The reason is

The gross public debt is the

If the government spends more than it receives in taxes during a given interval,then the result is

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, real GDP, and the Multiplier

Fiscal Policy

Money, banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters