Question 1

The federal budget experienced surpluses from

Accepted Answer

The federal budget experienced surpluses from 1998-2001.

Question 2

The share of __________ in total federal outlays will likely __________ as interest rates __________ from historic lows of recent years.

Accepted Answer

The answer of The share of __________ in total federal...

Question 3

The U.S. spent 3 percent of GDP building and maintaining the public infrastructure between 1950 and 1970. Since 1980, that share has

Accepted Answer

The statement mentions that the share of GDP spent on public infrastructure has decreased slightly since 1950-1970. Only option A fits this description. The other options are either incorrect or do not match the information provided.

Question 4

The opportunity cost of deficit spending is likely to be low

Accepted Answer

The opportunity cost of deficit spending is likely to be low when it creates or improves physical or human capital. This is because deficit spending used for these purposes can lead to economic growth and increased productivity in the long run, offsetting the initial cost of the deficit spending. Additionally, investing in physical or human capital can improve the standard of living for citizens and provide long-term benefits to society.

Question 5

Some economists have predicted that parents will act to offset the impact of deficit spending on their children by

Accepted Answer

Parents may choose to save more in order to increase gifts and bequests to their children as a way to offset the impact of deficit spending. This can provide a way for parents to ensure that their children receive some level of financial security in the future despite the economic challenges caused by deficit spending.

Question 6

According to economist Robert Barro,

Accepted Answer

Robert Barro's life-cycle hypothesis suggests that parents who are concerned about their offspring will save more in order to offset higher future taxes on those offspring. This reflects the idea that parents have an intergenerational perspective on saving and consumption, and they adjust their behavior accordingly.

Question 7

A federal capital budget would include spending on buildings, highways, computers, and military equipment.

Accepted Answer

A federal capital budget generally includes spending on physical assets such as buildings, infrastructure, equipment, and technology that have a long lifespan and provide future benefits to the government.

Question 8

Among the following cases, the opportunity cost of crowding out is the smallest when the government spends $9 billion

Accepted Answer

The answer of Among the following cases, the opportunity cost...

Question 9

One explanation for persistent federal budget deficits is that officials are not required to

Accepted Answer

Federal officials are not required to balance the budget, which can lead to persistent deficits. While there are laws and processes in place to try to address budget deficits, there is no clear constitutional mandate for a balanced budget. Additionally, elected officials may prioritize other issues over deficit reduction, especially if it may impact their chances for reelection.

Question 10

The evidence of the last several decades

Accepted Answer

The statement "fails to support Robert Barro's theory of how one generation saves to offset taxes on later generations" indicates that the evidence of the last several decades contradicts Barro's theory. Option A and B are extreme and not supported by empirical evidence. Option D is not mentioned in the statement, and option E is not relevant to the theory of one generation's tax burden.

Question 11

Which of the following is not true about the U.S. twin deficits?

Accepted Answer

The statement that the U.S. is now the world's leading creditor is not true regarding the U.S. twin deficits. The U.S. is actually a debtor nation, borrowing large sums from abroad to finance both its budget deficit and its trade deficit. Some critics blame U.S. fiscal policy for this situation, as the government spends more than it collects in revenue. Japan and China are major buyers of U.S. Treasury securities, which are issued to finance the deficit. As a debtor country, the U.S. becomes more and more reliant on those countries that supply credit, potentially limiting its policy options and increasing its vulnerability to economic shocks.

Question 12

Large budget __________ have come from a combination of tax __________ and spending __________.

Accepted Answer

The answer of Large budget __________ have come from a...

Question 13

A possible budget reform is

Accepted Answer

The answer of A possible budget reform is
...

Question 14

Some economists have theorized that increases in the deficit have little or no expansionary effect because families reduce their spending by an equivalent amount in order to protect the economic security of their offspring.

Accepted Answer

This theory is known as Ricardian equivalence, which suggests that when a government increases deficit spending, individuals anticipate future taxes to pay off the debt and thus save more, offsetting the stimulus effect.

Question 15

A possible budget reform is

Accepted Answer

The answer of A possible budget reform is
...

Question 16

A major foreign holder of U.S. Treasury securities is

Accepted Answer

The answer of A major foreign holder of U.S. Treasury...

Question 17

Including the unfunded liabilities of government retirement programs like Social Security in the deficit would

Accepted Answer

Including the unfunded liabilities of government retirement programs like Social Security in the deficit would triple the size of the national debt.

Question 18

A fuller picture of government's role in the economy includes state and local governments.

Accepted Answer

State and local governments play a significant role in the economy through their policies and regulations, investment in infrastructure, and provision of various public services. Their actions can impact businesses and individuals within their jurisdiction and contribute to the overall economic growth of the country.

Quiz 13: Federal Budgets and Public Policy

The federal budget experienced surpluses from

The share of in total federal outlays will likely as interest rates __ from historic lows of recent years.

The U.S. spent 3 percent of GDP building and maintaining the public infrastructure between 1950 and 1970. Since 1980, that share has

The opportunity cost of deficit spending is likely to be low

Some economists have predicted that parents will act to offset the impact of deficit spending on their children by

According to economist Robert Barro,

A federal capital budget would include spending on buildings, highways, computers, and military equipment.

Among the following cases, the opportunity cost of crowding out is the smallest when the government spends $9 billion

One explanation for persistent federal budget deficits is that officials are not required to

The evidence of the last several decades

Which of the following is not true about the U.S. twin deficits?

Large budget have come from a combination of tax and spending __.

A possible budget reform is

Some economists have theorized that increases in the deficit have little or no expansionary effect because families reduce their spending by an equivalent amount in order to protect the economic security of their offspring.

A possible budget reform is

A major foreign holder of U.S. Treasury securities is

Including the unfunded liabilities of government retirement programs like Social Security in the deficit would

A fuller picture of government's role in the economy includes state and local governments.