Exam 19: Government Debt and Budget Deficits

Ricardian equivalence refers to the same impact of financing government:

The government of Moneyland decides that it is not going to change its spending, but will decrease the tax rates. As per the theory of Ricardian equivalence, what will be the effects of the government action on national saving?

Hyperinflations typically occur when governments:

Current measures of the U.S. federal government's budget deficit account for all of the following except:

According to the traditional view of government debt, if taxes are cut without cutting government spending, then the international effect initially will be a capital ______ and a trade ______.

The real value of government debt is reduced by:

Using the model of aggregate demand-aggregate supply to illustrate the traditional view, graphically compare the short-run and long-run impact of debt-financed tax cuts on: a. output, b. prices.

According to the traditional view of government debt, if taxes are cut without a cut in government spending, then in the United States this situation will lead to ______ net indebtedness on the part of the United States to foreign countries and ______ net exports.

If the government levies a one-time temporary tax on the young and gives the proceeds to the elderly, and both generations follow the life-cycle consumption pattern but are not altruistically linked:

Indexed bonds produce all of the following benefits except:

An estimate of what government spending and tax revenue would be if the economy were operating at its natural rate of output and employment is called the ______ budget.

When the federal government incurs additional debt to acquire an asset, under current budgeting procedures the deficit ______, while under capital budgeting procedures the deficit ______.

Holding other factors constant, the ratio of government debt to GDP can decrease as a result of any of the following changes except:

Graphically illustrate the traditional view of the long-run impacts of a debt-financed tax cut on : a. saving, investment, and real interest rate using the classical model (Chapter 3 ). b. steady state capital per worker and output per worker using the Solow growth model.

In a time of inflation when the government budget is balanced in the conventional sense, the real (i.e., deflated) value of the government debt is:

According to the traditional view of government debt, if taxes are cut without cutting government spending, then the long-run effects will be ______ steady-state capital and ______ consumption.

If capital budgeting procedures were employed, then a budget deficit would be measured as:

Proponents of Ricardian equivalence argue that the relevant decision-making unit is the:

One way to shift the tax burden from the current generation to future generations is to finance a war:

The possibility of capital flight is likely to be greater at higher levels of government debt because there is a greater: