Questions:
Question 1. Why do deficits persist even during the expansionary phase of the business cycle?
Keynesian fiscal policy
political difficulties in cutting government spending
high taxes
steadily growing defense spending
the trade deficit increases the budget deficit
Question 2. In the Keynesian model, employment
is determined by output.
is determined by price level.
determines the level of output.
depends on aggregate supply.
is independent of output.
Question 3. The national debt is a burden on future generations if
it is larger than the one for which the current generation is responsible.
it was incurred to put idle resources to work.
borrowing reduced productive investment and future economic growth.
debt holders are wealthier than the average taxpayer.
the future generation is smaller than the present generation.
Question 4. A structural deficit
is the part of the deficit due to being in recession.
disappears when the economy reaches full-employment.
is the part of the deficit that would persist even at full-employment output.
is the result of congressional changes in the budget sent to Congress by the President.
is equal to the deficit other than the part accounted for by the surplus or deficit in the Social Security trust funds.
Question 5. The measure that shows how much of the deficit is due to a downturn in economic activity is
the structural deficit.
the real deficit.
the actual deficit
the cyclical deficit.
the budget deficit excluding Social Security accounts.
Question 6. If the equilibrium level of national income is less than the desired level of national income, then
the economy may be experiencing a rising price level.
there will be an export surplus.
a recessionary gap exists.
there is full employment.