Question 1

When we discuss government expenditure, we are talking about only purchases of goods and services.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A)  an inflation tax. 
B)  nothing-it cannot be done. 
C)  higher interest rates. 
D)  foreign saving. 
E)  printing more money. 
A)  an inflation tax. 
B)  nothing-it cannot be done. 
C)  higher interest rates. 
D)  foreign saving. 
E)  printing more money.

Question 3

If the federal government has a budget shortfall, it generally sells some of its real asset holdings to cover the excess outlays.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following should economic policymakers consider to be associated with large deficits and a large debt-to-GDP ratio?

Accepted Answer

A)  the importance of economic growth 
B)  the possibility of high inflation or default 
C)  intergenerational equity 
D)  the extent to which deficits crowd out private investment 
E)  All of these answers are correct. 
A)  the importance of economic growth 
B)  the possibility of high inflation or default 
C)  intergenerational equity 
D)  the extent to which deficits crowd out private investment 
E)  All of these answers are correct.

Question 5

In the language of generational accounting, by issuing bonds to finance a war in the present:

Accepted Answer

A)  pay no burden to enjoy peace. 
B)  future generations are paying for the peace they enjoy. 
C)  past and present generations pay for the peace. 
D)  only past generations pay for peace. 
E)  None of these answers is correct. 
A)  pay no burden to enjoy peace. 
B)  future generations are paying for the peace they enjoy. 
C)  past and present generations pay for the peace. 
D)  only past generations pay for peace. 
E)  None of these answers is correct.

Question 6

What was Japan's debt-to-GDP in 2015?

Accepted Answer

A)  76 percent 
B)  65 percent 
C)  100 percent 
D)  35 percent 
E)  120 percent 
A)  76 percent 
B)  65 percent 
C)  100 percent 
D)  35 percent 
E)  120 percent

Question 7

If current generations are depleting nonrenewable resources, they must compensate future generations by investing in:

Accepted Answer

A)  capital. 
B)  education. 
C)  research. 
D)  All of these answers are correct. 
E)  None of these answers is correct. 
A)  capital. 
B)  education. 
C)  research. 
D)  All of these answers are correct. 
E)  None of these answers is correct.

Question 8

The system used for the Social Security program is called:

Accepted Answer

A)  a Roth IRA. 
B)  a 401(k). 
C)  a mutual fund. 
D)  pay-as-you-go. 
E)  fully funded. 
A)  a Roth IRA. 
B)  a 401(k). 
C)  a mutual fund. 
D)  pay-as-you-go. 
E)  fully funded.

Question 9

The government uses funds to:

Accepted Answer

A)  make transfer payments. 
B)  buy goods and services. 
C)  pay interest on outstanding debt. 
D)  All of these answers are correct. 
E)  None of these answers is correct. 
A)  make transfer payments. 
B)  buy goods and services. 
C)  pay interest on outstanding debt. 
D)  All of these answers are correct. 
E)  None of these answers is correct.

Question 10

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

Accepted Answer

A)  France. 
B)  the United States. 
C)  the United Kingdom. 
D)  South Korea. 
E)  Japan. 
A)  France. 
B)  the United States. 
C)  the United Kingdom. 
D)  South Korea. 
E)  Japan.

Question 11

The federal government's largest expenditure in 2011 was:

Accepted Answer

A)  net interest payments. 
B)  the environment. 
C)  Social Security. 
D)  defense. 
E)  health. 
A)  net interest payments. 
B)  the environment. 
C)  Social Security. 
D)  defense. 
E)  health.

Question 12

The government's intertemporal budget constraint in the simple two-period case is:

Accepted Answer

A)    . 
B)    
C)    . 
D)    . 
E)    . 
A)    . 
B)    
C)    . 
D)    . 
E)    .

Question 13

In 2005, the debt-to-GDP ratio in the United States was about ________ percent, but by 2014 it was about ________ percent.

Accepted Answer

A)  37; 75 
B)  120; 67 
C)  24; 53 
D)  5; 43 
E)  0; 12 
A)  37; 75 
B)  120; 67 
C)  24; 53 
D)  5; 43 
E)  0; 12

Question 14

Which of the following is NOT an issue of large deficits and a large debt-to-GDP ratio for the economy?

Accepted Answer

A)  intergenerational equity 
B)  the importance of economic growth 
C)  the possibility of high inflation or default 
D)  the impacts on the overall money supply 
E)  the extent to which deficits crowd out private investment 
A)  intergenerational equity 
B)  the importance of economic growth 
C)  the possibility of high inflation or default 
D)  the impacts on the overall money supply 
E)  the extent to which deficits crowd out private investment

Question 15

Given what you know about the sizes of economies, which of the following countries probably would find it impossible to borrow more than $500 billion?

Accepted Answer

A)  France 
B)  Mongolia 
C)  Germany 
D)  the United States 
E)  Japan 
A)  France 
B)  Mongolia 
C)  Germany 
D)  the United States 
E)  Japan

Question 16

Empirical tests of crowding show strong evidence for crowding out.

Accepted Answer

A) True 
 B)False

Question 17

If the economy grows faster than the debt, the government can continue to accumulate debt.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A)  65 
B)  38 
C)  42 
D)  100 
E)  57 
A)  65 
B)  38 
C)  42 
D)  100 
E)  57

Question 19

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. The only period(s) in which the federal government ran a budget surplus since 1970 was/were:

Accepted Answer

A)  1998-2002 
B)  1970 
C)  1973-2001 
D)  None of these answers is correct. 
E)  All of these answers are correct. 
A)  1998-2002 
B)  1970 
C)  1973-2001 
D)  None of these answers is correct. 
E)  All of these answers are correct.

Question 20

What is Norway's debt-to-GDP situation? Why? Given this, what is it doing for the future?

Accepted Answer

Norway has a negative debt-to-GDP ratio

Exam 18: The Government and the Macroeconomy

When we discuss government expenditure, we are talking about only purchases of goods and services.

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

If the federal government has a budget shortfall, it generally sells some of its real asset holdings to cover the excess outlays.

Which of the following should economic policymakers consider to be associated with large deficits and a large debt-to-GDP ratio?

In the language of generational accounting, by issuing bonds to finance a war in the present:

What was Japan's debt-to-GDP in 2015?

If current generations are depleting nonrenewable resources, they must compensate future generations by investing in:

The system used for the Social Security program is called:

The government uses funds to:

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

The federal government's largest expenditure in 2011 was:

The government's intertemporal budget constraint in the simple two-period case is:

In 2005, the debt-to-GDP ratio in the United States was about ________ percent, but by 2014 it was about ________ percent.

Which of the following is NOT an issue of large deficits and a large debt-to-GDP ratio for the economy?

Given what you know about the sizes of economies, which of the following countries probably would find it impossible to borrow more than $500 billion?

Empirical tests of crowding show strong evidence for crowding out.

If the economy grows faster than the debt, the government can continue to accumulate debt.

In the United States, the average government spending-to-GDP ratio in 2014 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. The only period(s) in which the federal government ran a budget surplus since 1970 was/were:

What is Norway's debt-to-GDP situation? Why? Given this, what is it doing for the future?

Introduction to Macroeconomics

Measuring the Macroeconomy

An Overview of Long-Run Economic Growth

A Model of Production

The Solow Growth Model

Growth and Ideas

The Labor Market, Wages, and Unemployment

Inflation

An Introduction to the Short Run

The Great Recession: a First Look

The Is Curve

Monetary Policy and the Phillips Curve

Stabilization Policy and the Asad Framework

The Great Recession and the Short-Run Model

Dsge Models: the Frontier of Business Cycle Research

Consumption

Investment

International Trade

Exchange Rates and International Finance

Parting Thoughts

Filters

In 2005, the debt-to-GDP ratio in the United States was about percent, but by 2014 it was about percent.