module 32

If legislation were introduced to require the budget to be balanced at all times: a. fiscal policy could not operate as an automatic stabilizer of the business cycle. b. the effectiveness of monetary policy as an automatic stabilizer of the business cycle would decrease. c. the effectiveness of fiscal policy as an automatic stabilizer of the business cycle would increase. d. monetary policy could not operate as an automatic stabilizer of the business cycle.

A

If the average retirement age decreases: a. implicit liabilities will increase. b. implicit liabilities will decrease. c. implicit liabilities will be unaffected. d. the public debt will immediately increase.

A

Social Security spending is projected to: a. increase because of the impact of the baby boom. b. decrease because of the impact of the baby boom on the budget. c. stay the same over the next decade. d. increase for this decade and then decline.

A

Which fiscal policy would make a budget surplus smaller or a budget deficit larger? a. increase in government purchases of goods and services b. lower government transfers c. higher taxes d. lower interest rates

A

If the government's total revenues are greater than its total expenditures, then it has a budget: a. deficit. b. surplus. c. balance. d. equality.

B

The cyclically adjusted budget deficit: a. is no different from the actual budget deficit. b. fluctuates less than the actual budget deficit. c. fluctuates more than the actual budget deficit. d. remains unchanged throughout the business cycles..

B

The effect of a government deficit on the economy is: a. contractionary. b. expansionary. c. neutral. d. biased.

B

When the unemployment rate increases, the budget: a. is unaffected. b. tends to move into deficit. c. tends to move into a surplus. d. remains neutral.

B

Spending promises made by the government that are effectively a debt, although they are not included in the usual debt statistics, are known as: a. burden of debt. b. structural deficit. c. implicit liabilities. d. constructive debt

C

The U.S. government fiscal year runs from _____ to _____of the following calendar year. a. May 1; April 30 b. July 1; June 30 c. October 1; September 30 d. December 1; November 30

C

The cyclically adjusted budget balance is an estimate of: a. the contractionary fiscal policy needed to close an inflationary gap. b. the tax increase needed to compensate for larger government transfers so that the budget remains balanced. c. the expansionary fiscal policy needed to close a recessionary gap. d. what the budget balance would be if real GDP were exactly equal to potential output.

D

The cyclically balanced budget is important because it: a. is an estimate of the amount of expansionary fiscal policy that is needed to close an inflationary gap. b. is an estimate of the amount of contractionary fiscal policy that is needed to close a recessionary gap. c. indicates the amount of tax revenue that will be available for implicit liabilities. d. helps to determine if the government's taxation and spending policies are sustainable in the long run.

D

The national debt _______ in years in which the federal government incurs a _______. a. falls; deficit b. rises; surplus c. stays the same; surplus d. rises; deficit

D