Question 1

The two chief reasons why deficits and debt matter are that they i.lower credit ratings and increase interest rates.
Ii)redistribute consumption across generations.
Iii)create an income gap.

Accepted Answer

The statement mentions two reasons why deficits and debt matter:

i) Lower credit ratings and increased interest rates, which directly affects the government's ability to borrow and pay back loans, and can have ripple effects on the economy.

ii) The redistribution of consumption across generations, as deficit spending can lead to increased debt burden for future generations.

There is no mention of an income gap as a reason why deficits and debt matter. Therefore, the best choice is C which includes both reasons mentioned in the statement.

Question 2

As contrasted to the mainstream view,Keynesian economists believe that ________ than mainstream economists believe.

Accepted Answer

Keynesian economists believe that the multiplier effect is larger, meaning that changes in government spending or taxation can have a bigger impact on the overall economy than mainstream economists may suggest. This is because Keynesians believe that there can be situations of "underemployment equilibrium" where the economy is producing below its potential, and government intervention can help to boost demand and output.

Question 3

Other things remaining the same,the ________ a government's credit rating,the ________ is the interest it faces.

Accepted Answer

The lower a government's credit rating, the higher the risk it presents to investors. As a result, lenders may demand a higher interest rate to compensate for that additional risk. This means that a decrease in a government's credit rating (lower rating) is associated with an increase in the interest it pays on its debt (higher interest).

Question 4

The table above gives a nation's government outlays and tax revenues for 2008 through to 2012.
-Based on the table above,during which years did the country have a budget deficit?

Accepted Answer

The answer of  
The table above gives a nation's...

Question 5

When the government's expenses equal its revenue,the budget

Accepted Answer

When the government's expenses equal its revenue, the budget is considered balanced, and the government debt is not changing. This means that there is no deficit or surplus, and the total debt is not increasing or decreasing.

Question 6

National debt decreases in a given year when a country has

Accepted Answer

A budget surplus occurs when a country's revenue exceeds its expenditures. This means that the government is not borrowing money to fund its operations and can use excess funds to pay down the national debt. Therefore, a budget surplus leads to a decrease in the national debt.

Question 7

When the government's expenses exceed its revenues,the government debt

Accepted Answer

When the government's expenses exceed its revenues, it means that there is a budget deficit. In order to finance the budget deficit, the government has to borrow money, which results in a growth in government debt. Therefore, choice C is the correct answer.

Question 8

The table above gives a nation's government outlays and tax revenues for 2008 through to 2012.
-Based on the table above,during which years did the country have a balanced budget?

Accepted Answer

The answer of  
The table above gives a nation's...

Question 9

When government outlays are less than tax revenues,the government has

Accepted Answer

When government outlays are less than tax revenues, it means that the government has more money coming in than going out. Therefore, the government has a surplus, which is represented by a budget with a positive balance.

Question 10

A credit rating provides information on an investor's level of default risk.The highest rating is

Accepted Answer

AAA is the highest credit rating and indicates the lowest level of default risk.

Question 11

-The above table gives the government outlays and tax revenues from 2008 through to 2012 for two countries.In 2010,country A had a ________ and country B had a ________.

Accepted Answer

A budget deficit occurs when government outlays exceed tax revenues. In 2010, Country A had a budget deficit because its outlays were greater than its tax revenues, while Country B had a budget surplus because its tax revenues exceeded its outlays.

Question 12

The government debt is the amount

Accepted Answer

The government debt is the amount of debt outstanding that arises from past budget deficits. It represents the total amount of money owed by the government to its lenders as a result of borrowing to finance past budget deficits. It is not the same as the budget deficit or surplus in a given year (answer choices A and E), nor does it include future entitlement spending (answer choice C). While government outlays (answer choice B) are part of the equation, they do not fully capture the concept of government debt.

Question 13

If government revenues are $230 billion and the government's expenses are $235 billion,then the budget

Accepted Answer

The government has a budget deficit of $5 billion, meaning it spent $5 billion more than it earned in revenue. In order to cover this deficit, the government will have to borrow $5 billion, increasing its total debt by that amount.

Question 14

The government debt is

Accepted Answer

Government debt refers to the amount borrowed by the government to finance past budget deficits, such as through the issuance of government bonds.

Question 15

In May 2015,the credit rating for Commonwealth of Australia bonds was

Accepted Answer

Commonwealth of Australia bonds are considered as one of the safest investments in the world, with a long-standing AAA credit rating from all three major rating agencies (Moody's, Standard & Poor's, and Fitch). As of May 2015, the credit rating for Commonwealth of Australia bonds remained AAA, making option B the correct answer.

Question 16

From 2000 to 2008,the Australian government generally had a government budget ________ and so the government debt ________.

Accepted Answer

From 2000 to 2008, the Australian government had a budget surplus, which means that they were spending less than they were collecting in revenue. This resulted in a decrease in government debt.

Question 17

-The above table gives the government outlays and tax revenues from 2008 through to 2012 for two countries.In 2011,country A had a ________ and country B had a ________.

Accepted Answer

The answer of 
-The above table gives the government outlays...

Question 18

If you take a HECS-HELP student loan and repay after you graduate,you redistribute your income.In particular you consume ________ than your income when you are young and in university and ________ your income after you graduate.

Accepted Answer

Taking a HECS-HELP student loan means you consume more than your income when you are young and studying. After you graduate and start earning a higher income, you begin to repay your loan, which means you are consuming less than your income. Therefore, the best choice is C, where you consume more than your income when you take the loan, and less than your income after you graduate.

Question 19

The government debt can only be reduced if

Accepted Answer

The only way to reduce government debt is to have a surplus in the Commonwealth budget where the government is spending less than it is earning. This would allow for money to be put towards paying off the debt. Options A, B, D, and E do not directly address how to reduce government debt.

Question 20

As contrasted to the Keynesian view,mainstream economists believe that ________ than Keynesian economists believe.

Accepted Answer

Mainstream economists typically argue that the effects of fiscal stimulus are weaker than Keynesian economists believe, due to factors such as crowding out and the limited impact of government spending on long-term economic growth.

Quiz 14: Fiscal Policy

The two chief reasons why deficits and debt matter are that they i.lower credit ratings and increase interest rates. Ii) redistribute consumption across generations. Iii) create an income gap.

As contrasted to the mainstream view,Keynesian economists believe that ________ than mainstream economists believe.

Other things remaining the same,the a government's credit rating,the is the interest it faces.

The table above gives a nation's government outlays and tax revenues for 2008 through to 2012. -Based on the table above,during which years did the country have a budget deficit?

When the government's expenses equal its revenue,the budget

National debt decreases in a given year when a country has

When the government's expenses exceed its revenues,the government debt

The table above gives a nation's government outlays and tax revenues for 2008 through to 2012. -Based on the table above,during which years did the country have a balanced budget?

When government outlays are less than tax revenues,the government has

A credit rating provides information on an investor's level of default risk.The highest rating is

-The above table gives the government outlays and tax revenues from 2008 through to 2012 for two countries.In 2010,country A had a and country B had a .

The government debt is the amount

If government revenues are $230 billion and the government's expenses are $235 billion,then the budget

The government debt is

In May 2015,the credit rating for Commonwealth of Australia bonds was

From 2000 to 2008,the Australian government generally had a government budget and so the government debt .

-The above table gives the government outlays and tax revenues from 2008 through to 2012 for two countries.In 2011,country A had a and country B had a .

If you take a HECS-HELP student loan and repay after you graduate,you redistribute your income.In particular you consume than your income when you are young and in university and your income after you graduate.

The government debt can only be reduced if

As contrasted to the Keynesian view,mainstream economists believe that ________ than Keynesian economists believe.