FEDERAL BUDGET & FISCAL POLICY

The national debt is best described as the:

sum of all federal budget deficits, past and present.

Monetarists argue that the Federal Reserve should allow the money supply to grow:

at a constant rate

Unemployment compensation is an example of a (an):

automatic stabilizer.

The Fed:

serves as the central bank for the United States.

A government spending and taxation policy to achieve macroeconomic goals is known as:

fiscal policy.

The sum of past federal budget deficits is the:

national debt.

One concern over external national debt is that interest and principal payments transfer wealth overseas. The percentage of the national debt held in recent years by foreigners is approximately:

20 percent.

Which of the following statements is true?

Discretionary fiscal policy is the deliberate use of changes in government spending and taxes to stabilize the economy.

Decisions regarding purchases and sales of government securities by the Fed are made by the:

Federal Open Market Committee.

The central bank of the United States is the:

Federal Reserve Banking System.

Each year, the president must submit a budget proposal to Congress by:

January.

Which of the following types of financial institutions is required to belong to the Federal Reserve System?

National banks.

Which of the following is responsible for controlling the money supply in the United States?

The Board of Governors of the Federal Reserve System

When the U.S. federal government runs a budget deficit, it borrows money by selling:

Treasury bills, notes, and bonds.

Fiscal policy is concerned with:

changes in government spending and/or tax revenues.

Fiscal policy is government action to influence aggregate demand and in turn to influence the level of real GDP and the price level, through:

changes in government spending and/or tax revenues.

When the federal government is running a budget deficit:

government expenditures exceed government tax revenues

A balanced budget is present when:

government revenues equal government expenditures

External debt is that portion of the national debt:

held by foreigners.

If the federal government were to run a budget deficit, this would:

increase the size of the national debt.

The main purpose of the Fed is to:

maintain the proper functioning of our money system

The sum of past federal deficits is reflected in the federal:

national debt.

The total accumulated debt of the federal government due to deficit spending is called the:

national debt.

With respect to controlling the money supply, the law requires the Fed to take orders from:

no one-the Fed is an independent agency.

If the Federal Reserve increases the money supply, ceteris paribus, the:

rate of interest decreases.

If the federal government has a budget surplus, then the national debt is:

reduced.

When the Fed decreases the money supply, interest rates:

rise.

Which of the following is true?

A budget deficit will increase the national debt.

An advocate of supply-side fiscal policy would advocate which of the following?

ALL OF THE ABOVE Subsidies to produce technological advances. Reduction in regulation. Reduction in resource prices. Reduction in taxes. All of the above.

To finance a federal budget deficit, the U.S. Treasury borrows by selling:

ALL OF THE ABOVE Treasury bills. Treasury notes. Treasury bonds. All of the above.

Because of the automatic stabilizers, a decline in the level of economic activity will cause:

ALL of the above: a. a reduction in tax revenues collected. b. an increase in government expenditures. c. a greater budget deficit. d. all of the above.

Currently, how much of the U.S. national debt was owed to foreigners?

About 20 percent.

Which of the following is the objective of expansionary monetary policy?

An increase in employment.

Decisions to buy or sell securities at the Fed are made by the:

Federal Open Market Committee.

The Fed's principal decision-making body, which directs buying and selling U. S. government securities, is known as the:

Federal Open Market Committee.

The federal budget process begins when federal agencies submit their budget requests to the:

Office of Management and Budget (OMB).

Which of the following is not an automatic stabilizer?

Property tax revenue.

Which of the following groups analyzes federal budgets proposals?

The Congressional Budget Office.

What is the difference between the federal budget deficit and the national debt?

The budget deficit is the amount by which expenditures exceed revenues in a particular year, while the national debt is the cumulative effect of all past budget deficits and surpluses.

If Congress fails to pass a budget before the fiscal year starts, then federal agencies may continue to operate only if Congress has passed a:

continuing resolution

Changes in government spending and/or taxes as the result of legislation, is called:

discretionary fiscal policy.

Which of the following favors government policies to stimulate the economy by creating incentives for individuals and businesses to increase their productive efforts?

supply-side economics

"Tax cuts, by providing incentives to work, save, and invest, will raise employment and lower the price level." This argument is made by the:

supply-side economists.

The conduct of monetary policy is the responsibility of:

the Federal Reserve System.

If the fiscal year begins without a budget and Congress fails to pass continuing resolution, then:

the federal government shuts down.