Macroeconomics Chapter 12: Deficits and Debt – Flashcards
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The use of government taxes and spending to alter economic outcomes is known as
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Fiscal policy.
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Which of the following represents the use of fiscal policy to achieve a fiscal stimulus?
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Greater government expenditure or lower taxes.
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Which of the following is an appropriate fiscal policy prescription for the government to follow?
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Deficit reduction when there is excess AD.
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Deficit spending results whenever the government
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Finances current expenditures that exceed current tax revenues.
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With greater deficit spending, ceteris paribus,
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Any inflationary gap will become larger.
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Which of the following is true about the US federal government budget for the year 1998?
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The federal government receipts were greater than federal government spending for the first time in more than 25 years.
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When there is excess aggregate demand, the appropriate fiscal policy would be for the government to
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Make budget surpluses larger.
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Which of the following is an argument against balancing the federal budget?
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Doing so may prevent the government from pulling the economy out of recession.
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The fiscal year for the federal government begins on
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October 1.
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Much of each year's federal budget is considered "uncontrollable because
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Most of the current revenues and expenditures are the result of decisions made in prior years.
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In order to maintain a balanced budget every year, during a recession the government would have to
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Decrease spending or increase taxes or both.
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Which of the following is not an automatic stabilizer
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Defense spending.
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All of the following contribute to greater deficits when unemployment rises and reduce the deficit during an inflationary gap except for
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US exports.
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Which of the following is most likely to increase a federal budget surplus?
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A higher inflation rate and a lower unemployment rate.
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Which of the following might encourage the government to let inflation rates rise?
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A higher inflation rate reduces the budget deficit.
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The largest percentage of US national debt to GDP occurred during
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World War II.
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The opportunity cost of the debt is
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Less of an issue if the economy is below full employment since crowding out is less likely to occur.
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The debt would cease to grow if
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The federal government balanced its budget.
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Debt accumulation by the US government is the 1980's
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Exceeded the debt the country had accumulated over the preceding 200 years.
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The US federal debt that accumulated between 1970 and 2010
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Is an asset and liability for the US economy.
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Internal ownership of the national debt occurs when US Treasury bonds are published by all of the following except
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Foreign countries we trade with. It DOES occur when purchased by the Social Security Administration, The Federal Reserve System, and Individual US citizens.
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Which of the following owns the largest portion of the US national debt?
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The federal government.
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Foreign households and institutions hold approximately____ percent of the US national debt
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31.
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The "real burden" of the debt is directly related to
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The idea of opportunity cost.
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If debt-financed less productive government spending crowds out more productive private investment, further generations will bear
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Some of the burden of the debt due to a lower productive capacity.
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External debt of the United States refers to
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US government debt held by foreigners.
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At the time occurs, external financing of the debt allows the economy to
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Consume beyond the production possibilities curve.
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A deficit ceiling directly limits
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The rate at which government spending can exceed government revenue.
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Which of the following required all new federal government spending initiatives to be offset with increased taxes or cutbacks in other programs?
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The Budget Enforcement Act of 1990.
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Current projections indicate that by the year 2030, there will be _____ tax-paying workers for every retiree collecting Social Security
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2.0.
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Which of the following is true regarding the "American Recovery and Reinvestment Plan"?
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All of the choices are correct; The massive 2009 stimulus package was designed to jump-start the recession bound economy, critics argues that the massive deficits generated by President Obama's plan would undermine America's financial stability, and that in order to pay the deficits created by the plan the government would be forced to raise taxes and cut spending, which would reverse the boost from the stimulus.
