[Solved] For the Federal Deficit to Be Lowered

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.

The austerity plan required of the Greek government is a(n)________ policy, when normally a recession would suggest ________ policy. A)expansionary; contractionary B)contractionary; expansionary C)contractionary; contractionary D)contractionary; cyclically adjusted E)expansionary; pro-cyclical

The best time to correct a structural budget deficit is A)during a boom. B)during a recession. C)during an election. D)during a recovery from recession. E)during an economic slow down.

The federal government debt equals A)tax revenues minus government spending. B)government spending minus tax revenues. C)the accumulation of past budget deficits. D)the total value of Canadian bonds outstanding. E)the total value of Canadian assets held by foreigners.

The federal government debt fell during the period A)2008-2016. B)1980-1992. C)during World War I and World War II. D)2000-2008. E)the Great Depression.

Which of the following is a reason why we should consider the federal national debt a problem? A)The federal government is in danger of defaulting on its debt. B)If the debt drives up interest rates, crowding out will occur. C)If the debt was incurred to finance improvements in infrastructure, crowding out will occur. D)If the debt was incurred to finance research and development, crowding out will occur. E)If the debt increases private consumption less investment will occur.

The budget deficit increases during wars and recessions.

Increasing the federal budget deficit will contribute to increasing the federal government debt.