1. How does a government budget deficit occur?
- A government's spending exceeds its tax revenues.
- A government's tax revenues exceed its spending.
- If a nation carries a public debt, it must be running a deficit every year.
- A nation earns more on exports than it spends on imports.
2. If the government's spending exactly equals its revenues during a budget year, that government is
- balancing its budget.
- running a budget deficit.
- experiencing a budget surplus.
- paying off its public debt.
3. How does the federal government finance a budget deficit?
- It purchases U.S. Treasury bonds.
- It cuts spending on entitlement programs.
- It redeems its IOUs.
- It borrows funds by selling U.S. Treasury bonds.
4. The public debt can be thought of as
- accumulated budget deficits and surpluses.
- the total amount that the government spends on goods and services.
- the total amount that consumers owe on their credit cards.
- the total amount in taxes that consumers pay to the government.
5. When was the last year that the United States had a budget surplus?