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Flashcards in Chapter 12 Deck (25)
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1
Q

There is a recessionary gap win

A

The equilibrium GDP smaller than full employment GDP

2
Q

Over the last four decades we have had

A

Deficits and surpluses

3
Q

Which statement is true about automatic stabilizers

A

They have help smooth out the business cycle

4
Q

Statement 1 the federal budget deficit more than doubled between 1987 in 1992.
Statement 2 high federal budget deficits tend to push real interest rates.

A

Both are true

5
Q

When there is a recession the biggest percentage decline would be in

A

Corporate after-tax profits

6
Q

Each of the following is an example of discretionary fiscal policy except

A

The unemployment insurance program

7
Q

If the equilibrium GDP is 1 trillion greater than full employment GDP and there is an inflationary gap of 250 billion the multiplier is

A

4

8
Q

The national debt past the 2 trillion mark in what year

A

1986

9
Q

True false– over 50% of the outstanding public debt is owned by foreigners

A

True

10
Q

In 1930 John Maynard Keynes said that our main economic problem was

A

A week aggregate demand

11
Q

true or false—because of the national debt grows each year, we have to pay more and more interest on the debt; because interest payment keep rising, or deficits keep growing, further pushing up the debt.

A

True

12
Q

Right now our national debt is

A

Over 8 trillion

13
Q

Between the years 1989 in 1992 are federal budget deficit

A

Rose substantially

14
Q

In the mid-1990s the federal budget deficit

A

Rose slightly

15
Q

Large budget deficits tend to

A

Raise interest rates

16
Q

Interest rates in the United States would have been higher in recent years had it not been for

A

The inflow of funds from foreigners

17
Q

When government expenditures in a given year exceed tax receipts there exists

A

A budget deficit

18
Q

And illustration of the term automatic stabilizer is provided by

A

The tendency of tax collections to fall as the economy moves into a recession

19
Q

It’s full employment GDP is 1 trillion and equilibrium GDP is 7 trillion

A

There is definitely a recession gap

20
Q

The reason the multiplier is greater than one is that

A

Income is re-spent

21
Q

John Maynard Keynes Believe that

A

We could spend our way out of the great depression

22
Q

When government expenditures in a given year less than tax receipts there exists

A

A budget surplus

23
Q

Supposed to deficit in the year 2010 is 500 billion in the year 2011 it falls did 200 billion if the national debt is the at the beginning of year 2010 is 10 trillion how much will it be at the end of the year 2011?

A

10.7 trillion

24
Q

Automatic stabilizers do what

A

For probably insufficient to completely offset strong recessionary pressures

25
Q

Fiscal policy deals with each of the following except

A

The money supply