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