[Solved] During 1975-1995, the Federal Government Was

Recessions may actually reduce health care spending.

Explain why the timing of fiscal policy may be more difficult than the timing of monetary policy.

What is meant by crowding out? Explain the difference between crowding out in the short run and in the long run.

To evaluate the size of the federal budget deficit or surplus over time, it would be best to look at the A)absolute size of the budget deficit or surplus. B)budget deficit or surplus as a percentage of GDP. C)budget deficit or surplus as a percentage of tax revenues. D)budget deficit or surplus as a percentage of government spending. E)budget deficit or surplus per capita.

The largest Canadian federal budget deficits as a percentage of GDP in the last 50 years occurred during A)the mid-1980s. B)the early 1970s. C)the late 1990s. D)the early 2000s. E)the late 1960s.

A recession tends to cause the federal budget deficit to ________ because tax revenues ________ and government spending on transfer payments ________. A)increase; rise; falls B)increase; fall; rises C)decrease; rise; falls D)decrease; fall; rises E)increase; rise; rises

An economic expansion tends to cause the federal budget deficit to ________ because tax revenues ________ and government spending on transfer payments ________. A)increase; rise; falls B)increase; fall; rises C)decrease; rise; falls D)decrease; fall; rises E)decrease; fall; falls

The cyclically adjusted budget deficit or surplus measures what the deficit or surplus would be if the economy was A)in a recession. B)in an expansion. C)at potential GDP. D)at potential tax revenue. E)achieving its maximum potential growth.

Suppose the federal budget deficit for the year was $10 billion and the economy was in a recession.If the economy had been at potential GDP, it is estimated that tax revenues would have been $6 billion higher and government spending on transfer payments $5 billion lower.Using these estimates, the cyclically adjusted budget A)deficit was $21 billion. B)deficit was $11 billion. C)surplus was $1 billion. D)surplus was $11 billion. E)deficit was $1 billion.

The automatic budget surpluses and budget deficits that occur in the federal budget over the business cycle A)destabilize the economy. B)stabilize the economy. C)decrease potential GDP. D)increase potential GDP. E)destabilize the debt to GDP ratio.