The government budget constant for an economy is given below: G + TR; + rD-1-T; = D¿ – D¿-1 where G = government spending, TR is transfer payments, rD;-1 is interest payments on public debt, T is tax revenue and D is the stock of public debt. ccording to the government budget constraint in what way (or ways) can government expenditures be funded? O a. by a combination of tax revenue and borrowing from the public O b. by printing money O c. by tax revenue O d. by borrowing from the public O e. by borrowing from the central bank

The government budget constant for an economy is given below: G + TR; + rD-1-T; = D¿ – D¿-1 where G = government spending, TR is transfer payments, rD;-1 is interest payments on public debt, T is tax revenue and D is the stock of public debt. ccording to the government budget constraint in what way (or ways) can government expenditures be funded? O a. by a combination of tax revenue and borrowing from the public O b. by printing money O c. by tax revenue O d. by borrowing from the public O e. by borrowing from the central bank

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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In the United States, from the most recent fiscal data we reviewed in class, total government spending is roughly 39% of GDP; yet, using the expenditure method for calculating GDP, government expenditures on goods and services were only 17% of GDP. Which of the following most likely explains the difference? Select one: O a. Transfer payments are included in the second figure, but not the first one. O b. Transfer payments are included in the first figure, but not the second one. O c. Military (i.e. defense) spending on goods and services is included in the second figure, but not the first one. O d. Military (i.e. defense) spending on goods and services is included in the first figure, but not the second one.
Suppose the government's present value of current and projected future outlays is 75 percent of GDP and its present value of current and projected future revenues is 50 percent of GDP. What gap does this describe, and what is the size of the gap? This information describes the _______. A. fiscal gap, which is 25 percent of GDP B. generational gap, which is 25 percent of GDP C. fiscal gap, which is 125 percent of GDP D. fiscal gap, which is – 25 percent of GDP
Asap both 1.a) Which of the following statements is correct?l.Expansionary fiscal policy is used to remove a recessionary gap.ll. Expansionary fiscal policy is used to shift AD right.A) l onlyB) I onlyC)both I and ID) neither I nor ll 1.b) Which of the following are examples of contractionary fiscal policy?A) decreasing government expendituresB) increasing taxesC) increasing transfer paymentsD) A and B are both contractionary fiscal policiesE) A, B, and C are all contractionary fiscal policies
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2. Assume a given economy has an equilibrium GDP of $360 billion. A. If government spending and taxes both increase by $40 billion, determine the new equilibrium GDP. B. If both G and taxes increase by $40 billion, what impact will these two changes happening at the same time have on the budget? In other words, will these two changes cause a surplus, a deficit, or a balanced budget? C. Solve for the numerical value of the balanced budget multiplier.
TRUE - OR - FALSE A federal budget surplus occurs when government expenditures exceed tax revenues. O True O False
Suppose the stock of government debt in Canada at the end of one fiscal year is $482 billion. If the stock of debt rises to $501 billion by the end of the next fiscal year, then we know that in that year O A. the government had a primary budget deficit of $19 billion. O B. the government had a primary budget surplus of $19 billion. OC. the government had an overall budget deficit of S$19 billion. D. the government had an overall budget surplus of $19 billion.
Suppose the government incurs more debt to finance new military spending. To what extent will this impose a burden on future generations? O a. Government spending on military is considered investment expenditure. O b. Military spending does not at all benefit the future generations. O c. Government spending crowds out private investment spending. O d. Government debt needed to finance military expenditures is held by domestic entities.
If the government were to try to offset surplus years with deficit years over the business cycle, this would result in O A. a reduction in investment capital. O B. a higher debt-to-GDP ratio. OC. an annually balanced budget. O D. a structurally balanced budget. O E. a cyclically balanced budget.
Assume that the economy is in a recession and the government is experiencing a budget deficit. What happens if balanced-budget fiscal policy is used to eliminate the deficit? O a. Unemployment will fall. O b. GDP will rise. O c. The deficit could be eliminated if GDP rose. d. Government spending will fall. P NTR will remain unchanged.