Question 1

External debt is that portion of the national debt

Accepted Answer

A)  owed to investors outside the United States (foreign investors) .
B)  owed to the Federal Reserve system.
C)  that the U.S.does not intend to repay.
D)  owed to U.S.citizens and corporations.E) A) and B)
F) A) and C)

Question 2

The privately held government debt is that portion of the national debt that

Accepted Answer

A)  must be paid off at some point in the future.
B)  is owed to domestic and foreign investors.
C)  cannot be refinanced by issuing new debt.
D)  is owned by agencies of the federal government.E) A) and C)
F) B) and C)

Question 3

The new classical view of fiscal policy holds that

Accepted Answer

A)  budget deficits will stimulate consumption.
B)  budget deficits will decrease the saving rate.
C)  individuals fail to recognize that debt-financing implies higher future taxes.
D)  individuals fully anticipate the added tax liability implied by the debt financing and will increase their saving so they can meet this obligation.E) A) and C)
F) C) and D)

Question 4

The table below shows the revenues and expenditures for a new country during its first three years of existence.Use this data to answer the following question(s) .
Table ST8-1
 
-Refer to Table ST8-1.In the second year,this country

Accepted Answer

A)  ran a surplus of $20.
B)  ran a surplus of $30.
C)  had a deficit of $20.
D)  had a deficit of $30.E) A) and D)
F) A) and C)

Question 5

The large budget deficits of 2001-2011 were

Accepted Answer

A)  financed entirely through borrowing from domestic sources.
B)  accompanied by a rapid increase in private investment,which will enhance the welfare of future generations of Americans.
C)  accompanied by an increase in consumption as a share of GDP,which indicates the current generation of Americans is gaining at the expense of future generations.
D)  accompanied by large trade surpluses,which will enhance the welfare of future generations of Americans.E) A) and B)
F) A) and C)

Question 6

Widespread acceptance of the Keynesian theory of fiscal policy

Accepted Answer

A)  caused most economists to reject the public choice view of budget deficits.
B)  relaxed the political pressure to balance the budget and hence paved the way for the continual budget deficits of recent decades.
C)  was based on the view that continual budget deficits would help stabilize the economy.
D)  increased the pressure for a constitutional amendment mandating that the federal government balance its budget.E) All of the above
F) B) and D)

Question 7

Which country had the lowest government debt as a percent of GDP in 2009?

Accepted Answer

A)  United States
B)  Spain
C)  United Kingdom
D)  AustraliaE) A) and B)
F) A) and C)

Question 8

During the 1950s and 1960s,the national debt as a percent of GDP in the United States

Accepted Answer

A)  soared to an all-time high.
B)  declined.
C)  increased.
D)  was virtually unchanged.E) B) and D)
F) B) and C)

Question 9

The idea that a large public debt is "mortgaging the future of our children and grandchildren" is misleading because

Accepted Answer

A)  it is the Federal Reserve that will be responsible for making interest payments on the debt.
B)  future generations will have to bear the opportunity costs of the resources that are used today.
C)  future generations will not owe any interest obligations on the debt.
D)  future generations will inherit interest payments along with interest obligations.E) All of the above
F) C) and D)

Question 10

Many people assert that the national debt is not a problem because "we owe it to ourselves." Is this true?

Accepted Answer

This idea is only True in a limited sens...

Question 11

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

Accepted Answer

A)  increase the size of the national debt.
B)  reduce the size of the national debt.
C)  leave the size of the national debt unchanged.
D)  increase the national debt only if the government also expands the supply of money.E) A) and B)
F) B) and C)

Question 12

If a budget deficit as a percent of GDP is greater than the growth of real output,the national debt will

Accepted Answer

A)  decrease relative to the size of the economy.
B)  decrease in nominal terms.
C)  increase in nominal terms but decrease relative to the size of the economy.
D)  increase relative to the size of the economy.E) A) and B)
F) A) and D)

Question 13

If a country with a large government debt uses money creation to service and repay the debt,this will lead to

Accepted Answer

A)  lower interest rates.
B)  an appreciation of the nation's currency in the foreign exchange market.
C)  inflation,higher interest rates,and a financial crisis.
D)  rapid economic growth,as the expansionary monetary policy stimulates the economy and generates the additional tax revenue to service the larger debt.E) A) and B)
F) A) and C)

Question 14

If the federal government runs a budget deficit,and the budget deficit as a percent of GDP is equal to the growth rate of real output,the

Accepted Answer

A)  national debt will decrease as a share of GDP.
B)  national debt will remain a constant share of GDP.
C)  national debt will increase as a share of GDP.
D)  size of the national debt (in dollar value) will decline.E) None of the above
F) A) and D)

Question 15

Which of the following is true?

Accepted Answer

A)  A budget deficit will reduce the national debt.
B)  A budget deficit will increase the national debt.
C)  A balanced budget will increase the national debt.
D)  A budget surplus will increase the national debt.E) B) and D)
F) All of the above

Question 16

During 2009 and 2010,the federal government financed approximately ______ percent of its spending through borrowing.(Fill in the blank)

Accepted Answer

A)  20
B)  30
C)  40
D)  60E) All of the above
F) A) and C)

Question 17

The national debt is

Accepted Answer

A)  the difference between a nation's exports and imports of goods and services.
B)  the sum of the personal debt of all citizens in the United States.
C)  the cumulative effect of all past budget deficits and surpluses of the federal government.
D)  equal to the current size of the budget deficit.E) A) and D)
F) A) and C)

Exam 36: The Federal Budget and the National Debt

If a country with a large government debt uses money creation to service and repay the debt,this will lead to

Correct Answer
verified

Which of the following is true?

Correct Answer
verified

The table below shows the revenues and expenditures for a new country during its first three years of existence.Use this data to answer the following question(s) . Table ST8-1 -Refer to Table ST8-1.In the second year,this country

Correct Answer
verified

Many people assert that the national debt is not a problem because "we owe it to ourselves." Is this true?

Correct Answer
verified
This idea is only True in a limited sens...
View Answer

The large budget deficits of 2001-2011 were

Correct Answer
verified

The national debt is

Correct Answer
verified

During 2009 and 2010,the federal government financed approximately ______ percent of its spending through borrowing.(Fill in the blank)

Correct Answer
verified

Which country had the lowest government debt as a percent of GDP in 2009?

Correct Answer
verified

Widespread acceptance of the Keynesian theory of fiscal policy

Correct Answer
verified

External debt is that portion of the national debt

Correct Answer
verified

The privately held government debt is that portion of the national debt that

Correct Answer
verified

If the federal government runs a budget deficit,and the budget deficit as a percent of GDP is equal to the growth rate of real output,the

Correct Answer
verified

If a budget deficit as a percent of GDP is greater than the growth of real output,the national debt will

Correct Answer
verified

The new classical view of fiscal policy holds that

Correct Answer
verified

During the 1950s and 1960s,the national debt as a percent of GDP in the United States

Correct Answer
verified

The idea that a large public debt is "mortgaging the future of our children and grandchildren" is misleading because

Correct Answer
verified

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

Correct Answer
verified

Exam 36: The Federal Budget and the National Debt

If a country with a large government debt uses money creation to service and repay the debt,this will lead to

Correct AnswerverifiedShow Answer

Which of the following is true?

Correct AnswerverifiedShow Answer

The table below shows the revenues and expenditures for a new country during its first three years of existence.Use this data to answer the following question(s) . Table ST8-1 -Refer to Table ST8-1.In the second year,this country

Correct AnswerverifiedShow Answer

Many people assert that the national debt is not a problem because "we owe it to ourselves." Is this true?

Correct AnswerverifiedThis idea is only True in a limited sens...View AnswerShow Answer

The large budget deficits of 2001-2011 were

Correct AnswerverifiedShow Answer

The national debt is

Correct AnswerverifiedShow Answer

During 2009 and 2010,the federal government financed approximately ______ percent of its spending through borrowing.(Fill in the blank)

Correct AnswerverifiedShow Answer

Which country had the lowest government debt as a percent of GDP in 2009?

Correct AnswerverifiedShow Answer

Widespread acceptance of the Keynesian theory of fiscal policy

Correct AnswerverifiedShow Answer

External debt is that portion of the national debt

Correct AnswerverifiedShow Answer

The privately held government debt is that portion of the national debt that

Correct AnswerverifiedShow Answer

If the federal government runs a budget deficit,and the budget deficit as a percent of GDP is equal to the growth rate of real output,the

Correct AnswerverifiedShow Answer

If a budget deficit as a percent of GDP is greater than the growth of real output,the national debt will

Correct AnswerverifiedShow Answer

The new classical view of fiscal policy holds that

Correct AnswerverifiedShow Answer

During the 1950s and 1960s,the national debt as a percent of GDP in the United States

Correct AnswerverifiedShow Answer

The idea that a large public debt is "mortgaging the future of our children and grandchildren" is misleading because

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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Correct Answer
verified
This idea is only True in a limited sens...
View Answer

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