Which statement best explains why budget deficits may bring on a recession? a) Large deficits increase interest rates, attracting foreign investors. b) Persistent deficits lead to economic problems that scare away foreign investors. c) Spiraling national debt depresses private saving, reducing the amount of capital that can be invested. d) Deficit spending leads to a reduction in aggregate demand and a decrease in output.

Which statement best explains why budget deficits may bring on a recession? a) Large deficits increase interest rates, attracting foreign investors. b) Persistent deficits lead to economic problems that scare away foreign investors. c) Spiraling national debt depresses private saving, reducing the amount of capital that can be invested. d) Deficit spending leads to a reduction in aggregate demand and a decrease in output.

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter13: Federal Deficits, Surpluses, And The National Debt

Section: Chapter Questions

Problem 13SQ

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Which of the below statements is INCORRECT about budget deficits and surpluses? Group of answer choices An economy should steer clear of deficit budgets even during economic recessions. If an economy slips into a recession, tax revenues will fall, but raising taxes will certainly worsen the situation. A budget deficit is funded by borrowing money by selling treasury bonds, which requires the government to pay back the interest on the amount borrowed, plus the principal borrowed. Since 2001 the U.S. has been consistently spending more than the tax revenue is collected, and the amount borrowed plus interest owed has been accumulating to a rather large national debt. A budget deficit occurs when the government spends more than it collects in tax revenues.
Which of the following is not true of deficits? Supply-side policies contribute to budget deficits by cutting taxes. Demand-side policies contribute to budget deficits by increasing government spending. Deficits in any budget year are repaid in the next year's budget. Deficits result in increased debt.
Why did the budget surpluses in 2000 and 2001 give way to a series of budget deficits beginning in 2002? Why did those deficits increase substantially beginning in 2008?
The effects of a budget deficit can be offset by: a. External financing b. Crowding out c. A structural deficit d. All of the above Crowding out occurs when: a. Business investment increases due to lower interest rates b. There is an increase in business borrowing c. An increase in federal borrowing reduces private borrowing d. There is an increase in the nations’ savings If the government wanted to reduce inflation in the economy, it could: a. Increase income transfers b. Increase government spending c. Cut taxes d. Increase taxes
Naked Economics: Undressing the Dismal Science Book by Charles Wheelan This question is based on the section of "Keeping Score" in Wheelan's Naked Economics, where the author discusses budget deficits and surpluses. Which of the below statements is INCORRECT? A) If an economy slips into a recession, tax revenues will fall, but raising taxes will certainly worsen the situation. B) A budget deficit occurs when the government spends more than it collects in tax revenues. C) An economy should steer clear of deficit budgets even during economic recessions. D) A budget deficit is funded by borrowing money by selling treasury bonds, which requires the government to pay back the interest on the amount borrowed, plus the principal borrowed. E) Since 2001 the U.S. has been consistently spending more than the tax revenue it collected, and the amount borrowed plus interest owed has been accummulating to a rather large national debt.
Answer the following questions: As you know, the US government has been running budget deficits for several years now. In your opinion, and based on economic reasoning, what will happen to the US economy if the US Federal Government continues to run annual budget deficits for the next decade. Will the economy survive that? Will the economy grow? Will it grow as fast as it could? Will the deficits cause the economy to grow faster? Will it grow at all? These are some of the questions you might address in your primary post.
How is the Social Security system currently influencing the size of the budget deficit? If it is not re-formed, how will Social Security influence the budget deficit a decade from now? Is this a cause for concern? Why or why not?
Like any economic crisis, unemployment rises, aggregate income falls, and tax collections drop during the Great Recession. While unemployment rises, safety net spending rises. To stabilize the economy, the government appears to have just two options: harsh austerity (reduce spending) or more borrowing. It is difficult to defend cuts in federal government programs, especially those that provide a minimum standard of living for the poor, but increasing indebtedness hurts the economy. In a few words, analyze Costs of eliminating the budget deficit solely through (1) personal tax increases, and/or (2) through spending cut by decreasing in transfer payments (i.e., Social Security, Medicare and Medicaid) and in discretionary spending (such as defense and education budgets)
For the last 50 years or so, republicans and democrats at the national level have each favored policies that have led to increased budget deficits, but the policies are different. Republicans have favored tax cuts, while democrats have favored increases in government spending. Perform TWO composition of output analyses, one that examines the impact of a tax cut and one that examines the impact of an increase in government spending. Then, write a sentence or two that describes how the impacts of the two are the same and how they are different
All of the following rules are effective in reducing the budget deficit except: A. spending caps B. inflation targeting C. Constitutional amendments D. PAYGO rules
The most difficult approach to handling a budget deficit is to [increase income | liquidate investments]. answer group a. increase income b. liquidate investments