Exam 18: The Government and the Macroeconomy

If the government increases its budget deficit, ________ is/are ameliorated if the economy has access to ________.

Refer to the following figure when answering the following questions. Figure 18.1: Federal Government Receipts and Outlays, 1990-2012 (Source: Federal Reserve Economic Data, St. Louis Federal Reserve) -Consider Figure 18.1. The federal government ran a deficit at all points during the period:

Figure 18.4 below shows bond yields on U.S., Japanese, and German 10-year bonds, 1997-2014. The gray shaded areas represent Japanese recession dates. During this period the U.S. had two official recessions: one in 2001 and one from 2008-2009. Given this information and what you know about Japanese and American debt-to-GDP ratios, explain the reason(s) for the differences in Japanese and American bond yields.Figure 18.4: Japan and USA 10-Year Bond Yields and Japanese Recession Dates: 1997-2014

Which of the following is/are possible explanation(s) for rising health care expenditures?

Consider the government's intertemporal budget constraint: . Term A is the ________, and term B is the ________.

An implication of the intertemporal budget constraint is that:

The largest U.S. debt-to-GDP ratio occurred during the Great Depression.

Of the following countries, the one with the largest annual government spending-to-GDP ratio in 2014 was:

Germany has the highest share of medical expenses to GDP.

In 1956, the Federal-Aid Highway Act of 1956 created the interstate highway system, at a cost of about $27 billion: $25 billion from the federal government and the remaining $2 billion from states. The full federal share was to be financed by issuing 30-year bonds. But this type of financing was not without its detractors, in particular Senator Harry Flood Byrd of Virginia, who biographer Alden Hatch described as having "an almost pathological abhorrence for borrowing that went beyond reason to the realm of deep emotion." (Quote from: http://www.fhwa.dot.gov/publications/research/.../pavements/.../publicroads/96summer/p96su10.cfm.) You have been given the unenviable task of convincing Senator Byrd that borrowing to build freeways is good and fair. Use the language of generational accounting to make your argument.

If investors begin to doubt the ability to finance spending with ________, markets will demand ________.

The federal government's largest source of revenue in 2011 was:

The ratio of all levels of government spending-to-GDP in the United States is under 40 percent.

Which of the following countries has the largest government spending-to-GDP ratio?

An explanation of why governments are willing to burden future generations with debt to finance a war today is that future generations will enjoy peace and must pay something.

The government debt is:

The difference between the primary and total deficits is that the primary deficit:

Which country has the highest share of medical expenses to GDP?

Argentina, Mexico, and Brazil have all defaulted on their debts at one time or another.

In the past decade, which country has restructured its debt?