Answered: All of the following rules are…

All of the following rules are effective in reducing the budget deficit except O A. spending caps. B. PAYGO rules. O C. constitutional amendments. D. inflation targeting.

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter36: Six Debates Over Macroeconomic Policy

Section: Chapter Questions

Problem 6PA

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All of the following rules are effective in reducing the budget deficit except
O A. spending caps.
O B. PAYGO rules.
O C. constitutional amendments.
O D. inflation targeting.

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It can be argued that a government budget deficit, rather than being a burden for future generations, may provide net benefits to future generations. This view is correct if the current budget deficit is used to... O a Pay transfers such as welfare and old age pensions in the present period. O b. Ensure that all interest paid goes to residents rather than foreigners. O c. Finance projects that deliver long-term benefits to society. O d. Invest in the purchasing of goods not available in the local economy O e. Pay subsidies to Canadian firms to offset rising energy costs.
In the long run, the government budget will add to sustained inflation if... O a. Deficits are always accompanied by decreases in the money supply. O b. They require decreases in the money supply. O c. Government borrowing lowers interest rates. O d. The government finances the deficit by borrowing from the private sector. Continual deficits are financed by the continual creation of new money.
Deficit financing means that the government budget deficit is financed by the expansion of money supply. O True O False
To correct for inflation when calculating real debt, one must: O b. O c. add the inflated debt and the nominal budget deficit. assume that real debt is zero. multiply the percentage change of debt by the inflation rate. O d. deduct the amount of inflated debt from the nominal budget deficit.
What is the correct answer?
In the long run, the government budget will add to sustained inflation if. Oa Deficits are always accompanied by decreases in the money supply. Ob. Continual deficits are financed by the continual creation of new money. Oc They require decreases in the money supply. Od Government borrowing lowers interest rates. O e The government finances the deficit by borrowing from the private sector.
ses Aside from the few years during Clinton's administration, what is the state of the national debt? Select one: O a. the debt is growing O b. the debt has been reduced considerably during the Bush and Obama administrations. O c. the debt is steadily shrinking O d. the debt is mostly staying the same Which president tried to limit
Refer to the figure at right. Government policy that moved the economy from A to B would be accomplished by O A. an expansionary fiscal policy combined with a contractionary monetary policy. O B. OC. a contractionary fiscal policy combined with an expansionary monetary policy. a contractionary policy that would reduce the rate of inflation and would cause workers to remain unemployed longer than they were before. O D. raising the minimum wage. Inflation Rate 2.5 A B I 6 D Unemployment Rate
aget TRUE - OR - FALSE The amount the government owes to the public is the deficit. O True O False
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