Exam 18: The Government and the Macroeconomy

In 2012, the ratio of government spending to GDP in Denmark, France, and Sweden was ________ percent.

________ is/are what may happen when the central government needs to borrow to finance its deficit to the detriment of private firms.

In 2015, the largest single source of U.S. federal government revenue was:

The CBO forecasts that the number of workers per retiree in the Social Security program will rise from 2 to 3.3 in the coming decades.

Generational accounting implies that, holding the present value of government spending constant, budget deficits will not crowd out investment.

There is a "magic level" of the debt-GDP ratio that triggers government default.

In 2012, the ratio of all levels of government spending to GDP in the United States was about ________ percent.

Refer to the following figure when answering the following questions. Figure 18.2: Government Outlays and Receipts as a Percentage of GDP, 1947-2012 -Consider Figure 18.2. What was the cause of the huge budget deficit beginning in 1981?

Figure 18.5 below shows German and Italian GDP (solid) and government debt (dashed) for the period 1996-2014. Which country is likely to have more sustainable debt? Explain. Which country is more likely to default on its debt and have higher government bond interest rates?Figure 18.5: German and Italian GDP and Government Debt: 1996-2014

In the euro area, the average government spending-to-GDP ratio in 2014 was about ________ percent.

The national income identity can be rearranged to show that private saving + government saving+ foreign saving = investment.

If domestic saving is less than domestic investment, then investment can be financed by:

The national income identity can be rearranged to show that ________ equals ________.

The debt-to-GDP ratio in the United States was over 100 percent during World War II.

In 2015, the largest single U.S. federal government expenditure was:

An explanation of why governments are willing to burden future generations with debt to finance a war today is that:

In 2014, the debt-to-GDP ratio in the United States was about ________ percent.

The government's intertemporal budget constraint assumes the budget is always balanced.

According to the Congressional Budget Office report "A 125-Year Picture of the Federal Government's Share of the Economy, 1950 to 2075," Medicare, Medicaid, and Social Security will be about ________ percent of GDP in 2030.

Refer to the following figure when answering the following questions. Figure 18.2: Government Outlays and Receipts as a Percentage of GDP, 1947-2012 -Consider Figure 18.2. During which of the following periods did the federal government run a budget surplus?