Macro Chapter 12

The use of government taxes and spending to alter economic outcomes is known as

Which of the following represents the use of fiscal policy to achieve a fiscal stimulus?

If full-employment income and equilibrium income are equal for a country, then a tax cut will result in

Which of the following is an appropriate fiscal policy prescription for the government to follow?

Deficit spending results whenever the government

Which of the following policies will reduce the budget deficit while achieving greater fiscal restraint?

With greater deficit spending, ceteris paribus,

If full-employment output exceeds equilibrium output, greater deficit spending will result in

With an increase in deficit spending, the

If the economy is in a recession,

A budget surplus is

When there is excess aggregate demand, the appropriate fiscal policy would be for the government to

In order to reduce the U.S. debt

According to Keynes, an unbalanced budget is appropriate in all of the following situations except when

Which of the following is an argument against balancing the federal budget?

The fiscal year

The fiscal year for the federal government begins on

The elements of the federal budget not determined by past legislative or executive commitments are

Discretionary expenditures account for approximately

Much of each year's federal budget is considered "uncontrollable" because

Uncontrollable government spending includes

In order to maintain a balanced budget every year, during a recession the government would have to

Fiscal restraint is

Which of the following is not an automatic stabilizer?

Automatic stabilizers tend to stabilize the level of economic activity because they

Automatic stabilizers

Spending for unemployment compensation and welfare benefits increase automatically

Which of the following is an automatic stabilizer that reduces tax receipts during a recession?

All of the following contribute to greater deficits when unemployment rises and reduce the deficit during an inflationary gap except for

A progressive income tax system is particularly effective as an automatic stabilizer because

Which of the following is a possible effect of automatic stabilizers on the federal budget?

An increase in unemployment, ceteris paribus,

Which of the following is most likely to increase a federal budget surplus?

Which of the following is most likely to reduce a federal budget surplus?

Which of the following might encourage the government to let inflation rates rise?

For the convenience of analyzing the part of the deficit that is sensitive to fiscal policy, the actual deficit is divided into which of the following components?

In contrast to the structural deficit, the cyclical deficit reflects

Which of the following results from a change in the business cycle, ceteris paribus?

If the cyclical deficit shrank by $60 billion while the structural deficit increased by $35 billion, the total deficit

If the budget deficit for each year is held to a constant nominal value during constant inflationary times, then the inflation-corrected or real value of the total debt would

The structural deficit represents

If the structural deficit is zero,

Suppose the economy is at a full-employment GDP of $1 trillion and the tax revenue received by the federal government is always one-fifth of GDP. If planned government expenditure is $300 billion, the structural

If the total budget deficit is $200 billion and the deficit at full employment is $120 billion, then the

The largest percentage of U.S. national debt to GDP occurred during

Which of the following is the best indication that the government is pursuing restrictive fiscal policy?

A decrease in private sector borrowing and spending caused by increased government borrowing is

Crowding out is most likely to occur when the federal government

Increased government purchases crowd out private purchases whenever the economy is

Which of the following is not true when the economy is fully employed and government bonds are sold to finance greater government spending?

The opportunity cost of the debt is

An opportunity cost that occurs because of increased government spending is

The government can use a budget surplus to do all of the following except

If there was a federal budget surplus and the government decided to either increase spending or decrease taxes

An increase in private sector borrowing and spending caused by decreased government borrowing is known as

Which of the following would occur if the federal government decided to use a budget surplus to reduce the existing debt?

Crowding in is the result of

The national debt is

The U.S. government incurred a national debt for the first time during

The debt would cease to grow if

The national debt

The fiscal agent of the U.S. government is the

In the 20th century, the ratio of the U.S. debt to GDP has

A measure of the burden of continual deficit financing over time is the ratio of

The national debt increased by nearly $2 trillion in the 1980s because of all of the following except

Debt accumulation by the U.S. government in the 1980s

Which of the following contributed to the increase in the national debt during the 1990s?

Policies designed to pay off the national debt will result in:

The U.S. federal debt that accumulated between 1970 and 2010

An obligation to make future payment is

When the Federal Reserve System buys bonds in the open market, the national debt

Internal ownership of the national debt occurs when U.S. Treasury bonds are purchased b all of the following except

Federal agencies hold roughly _____ percent of all outstanding Treasury bonds.

Which of the following owns the largest portion of the U.S. national debt?

The largest single holder of the U.S. national debt after the U.S. government is

The U.S. private sector holds about _____ percent of outstanding U.S. Treasury bonds.

U.S. Treasury bonds owned by U.S. households, institutions, and government entities are referred to as

Foreign households and institutions hold approximately _____ percent of the U.S. national debt.

When the U.S. Treasury issues new bonds to replace bonds that have matured, it is engaging in

Interest payments on the national debt

The "real burden" of the debt is directly related to

The cost of servicing the debt may increase if

Debt service

Selling bonds to finance new government debt leads to an opportunity cost that is

Deficit financing tends to change the mix of output in the direction of more

The burden of the internal portion of the debt is incurred

If debt-financed less productive government spending crowds out more productive private investment, future generations will bear

If deficit spending does not contribute to public investment and crowds out private investment, then

Which of the following statements about the U.S. national debt is not correct?

External debt of the United States refers to

At the time it occurs, external financing of the debt allows the economy to

The burden of the debt is passed on to future generations when the debt is held by

A deficit ceiling directly limits

The Gramm-Rudman-Hollings Act of 1985 created a

Which of the following is not an explanation of why the Gramm-Rudman-Hollings Act proved inadequate in reducing the deficit?

If Congress failed to keep the deficit below the ceiling, then the Gramm-Rudman-Hollings Act required

Debt ceilings are designed to

To pay back Social Security loans, Congress could do all of the following except