Econ hw 8

A strengthening economy could lead to a smaller budget deficit because why?

Because govt spending would decrease as GDP increases because if GDP increases so does tax revenues

Govt spending and Tax revenues change with GDP, balancing the federal budget each year would cause __________________________________.

Economic disruptions

The demand for the US dollar is a derived demand for

US goods, services and or assets

The demand curve for the US dollar is downward sloping because an increase in the foreign exchange value of the dollar makes what more expensive to foreigners

US goods, services or assets more expensive to foreigners

What could shift demand for the US dollar to the left?

a decrease in US interest rates

what would shift the supply for the US dollar to the right?

an increase in foreign interest rates

the supply curve for the US dollar is upward sloping because an increase in the foreign exchange value of the dollar makes

foreign goods services and assets less expensive to americans

the supply for the US dollar is a derived demand from

foreign goods, services and assets

fiscal policy includes what 2 types of ways to spend money

govt spending and taxes

in what ways does a federal budget act as an automatic stabilizer during an expansion period

govt spending goes down, taxes go up

in what ways does a federal budget act as an automatic stabilizer during a recession

govt spending goes up, taxes go down

monetary policy is controlled by the fed and uses what 2 things

money supply and interest rates

Monetary policy includes changes in the _________________________________________________ and is controlled by the ___________________

money supply and interest rates; Federal reserve

Fiscal policy includes changes in government ____________________________________________ and is controlled by the _______________.

spending and taxes; government

what is the difference b/w the federal budget deficit and the federal govt debt

the federal budget deficit is the year to year short fall in tax revenues relative to govt spending. T < G+TR financed through govt bonds Federal govt debt is the accumulation of all past deficits

The national debt is best measured as

total value of US treasury securities outstanding