Quiz #10: Chapter 13

In 2012, about ____ percent of the U.S. public debt was held by people and institutions abroad. 43 18 29 33

Since 2002, the United States has had: large federal budget surpluses. large federal budget deficits. modest trade surpluses. a rising natural rate of unemployment.

Which of the following is a true statement? Fiscal policy has been expansionary every year since 2000. Fiscal policy has been contractionary every year since 2000. Fiscal policy swung from expansionary to contractionary in 2002. Fiscal policy swung from contractionary to expansionary in 2002.

The cyclically adjusted budget tells us: that in a full-employment economy, the federal budget should be in balance. that tax revenues should vary inversely with GDP. what the size of the federal budget deficit or surplus would be if the economy was at full employment. the actual budget deficit or surplus realized in any given year.

(Last Word) In 1960 the ratio of workers to Social Security and Medicare beneficiaries was ______; by 2040 it is projected to be _________. 10:1; 3:1 3:1; 2:1 5:1; 2:1 2:1; 3:1

Which of the following is considered a legitimate concern of a large public debt? Bankruptcy of the federal government. Crowding-out of private investment. Burdening future generations. Collapse of the financial system.

Payment of interest on the U.S. public debt: increases the current domestic standard of living in the United States. has no effect on the distribution of income. is thought to decrease income inequality. is thought to increase income inequality.

The largest proportion of the U.S. public debt is held by: the U.S. public (individuals, businesses, financial institutions, and government). foreign individuals and institutions. the Federal Reserve System. U.S. government agencies.

The American Recovery and Reinvestment Act of 2009: created a $700 billion rescue package for financial institutions. cut taxes by $152 billion, distributed primarily as rebate checks to taxpayers. implemented a $787 billion package of tax cuts and government expenditure increases. substantially lowered interest rates in an attempt to stimulate investment spending.

Economists refer to a budget deficit that exists when the economy is achieving full employment as a: cyclical deficit. cyclically adjusted deficit. natural deficit. nonrecurring deficit.

The crowding-out effect of the public debt may be dampened if the investment-demand curve is shifting to the right. True False

An increase in the cyclical deficits will automatically increase the cyclically adjusted budget deficit. True False

It is more meaningful economically to measure the public debt relative to the GDP than to measure it in absolute terms. True False

Permanent tax reductions are more likely to be expansionary than temporary tax reductions. True False

Tax increases and government spending cuts by state governments during recessions often reduce the expansionary impact of fiscal policy by the federal government. True False