[Solved] During Recessions, Government Expenditure Automatically

If the federal government's expenditures are less than its tax revenues, then A)a budget surplus results. B)a budget deficit results. C)the budget is balanced. D)a cyclical deficit results. E)No conclusion can be drawn here regarding the budget surplus or deficit without information regarding government purchases versus other outlays.

Since 1965, the largest federal budget deficit (as a percentage of GDP)occurred A)during the 1990s. B)during the 1980s. C)during the oil price shocks of the 1970s. D)during the global financial crisis of the 2000s. E)during the recession of 2015.

Government deficits tend to increase during A)recessions and booms. B)periods of war and recession. C)periods of below- or above-average growth. D)periods of increased financial uncertainty. E)periods immediately following elections.

Since 1975, the federal government budget was in surplus during A)1981 through 1985. B)1990 through 1997. C)1998 through 2008. D)1980 through 1989. E)2009 through 2016.

The federal budget deficit acts as an automatic stabilizer because A)government tax revenues decrease during a recession. B)employment insurance payments decrease during a recession. C)employment insurance payments increase during expansionary periods. D)health care spending increases during expansionary periods. E)governments are required to balance their budgets during expansions.

The cyclically adjusted budget deficit calculates the budget surplus or deficit at A)real GDP. B)potential GDP. C)nominal GDP. D)average GDP. E)maximum GDP.

If the federal budget has an actual budget deficit of $35 billion and a cyclically adjusted budget deficit of $30 billion, then the economy A)must be at potential real GDP. B)must be below potential real GDP. C)must be above potential real GDP. D)could be below or above potential real GDP.

Suppose that the federal budget is balanced when GDP is at potential GDP.If equilibrium GDP falls below potential, A)this will result in a current budget deficit. B)the cyclically adjusted budget will be balanced. C)government transfer payments will be rising and tax receipts will be falling. D)government receipts from social security premiums will be falling. E)All of the above are correct.

The main economic objection to the austerity plan attached to the bailout of the Greek government during the global financial crisis was that A)reductions in government spending to balance the budget can make recessions worse. B)the plan was imposed on Greece by Germany. C)the Greek government debt is still unlikely to be repaid. D)the required cuts in pensions were not passed in a referendum. E)the increase in taxation made it harder for Greece to borrow from foreign creditors.

Suppose the government wants to maintain a balanced budget.To achieve this goal, when the economy falls into recession government would need to ________ taxes, which would cause aggregate demand to ________. A)decrease; decrease B)decrease; increase C)increase; decrease D)increase; increase