Question 1

If for every dollar increase in farm subsidies the government decreased urban welfare payments by a dollar,we would expect the net effect to be

Accepted Answer

If for every dollar increase in farm subsidies the government decreased urban welfare payments by a dollar, there would be no change in the budget deficit since the two programs would offset each other. The increase in farm subsidies would be paid for by the decrease in urban welfare payments, resulting in no net increase in government spending.

Question 2

Some economists argue that federal government capital projects,which offer benefits over a number of years,should be financed over a number of years and therefore involve deficit finance.

Accepted Answer

Capital projects often involve large sums of money that may not be available in a single fiscal year. Financing them over a number of years through deficit spending allows the government to spread the cost of the project over the period during which the benefits will be realized. This approach is often considered prudent and fiscally responsible.

Question 3

If government increased Social Security benefits and decreased the salaries of government workers by the same amount,we would expect the immediate effect to be

Accepted Answer

The answer of If government increased Social Security benefits and...

Question 4

If the U.S.government spent $20 million paying people to dig holes in 2005,and then spent $30 million paying the same people to fill the holes up again that same year,we would expect the net effect to be a(n)

Accepted Answer

The net effect of spending $20 million to dig holes and then $30 million to fill them up again would be an increase in the budget deficit as government purchases of goods and services increased by $50 million. This is because both actions involve direct government spending on services, totaling $50 million, not transfer payments or a partial increase based on the difference in spending.

Question 5

With few exceptions,the U.S.federal government has historically run a balanced budget.

Accepted Answer

Historically, the U.S. federal government has not always run a balanced budget. In fact, it has often run deficits, particularly in times of war or economic downturns.

Question 6

Suppose that government purchases of goods and services increase by $200 and at the same time lump-sum taxes are increased by $200.(It is important to note that income tax rates do not change.)Which of the following is true?

Accepted Answer

The answer of Suppose that government purchases of goods and...

Question 7

The federal budget deficit becomes __________ during recessions because __________.

Accepted Answer

During recessions, there are higher unemployment rates which lead to more individuals requiring government assistance in the form of transfer payments. Additionally, the decline in economic activity during recessions leads to lower tax revenues for the government. These two factors result in an increase in the federal budget deficit.

Question 8

One rationale for the sizable wartime deficits run by the U.S.government is that the alternative to defending the country from an aggressor may involve substantial long-term costs.

Accepted Answer

The statement is true. The rationale for running sizable wartime deficits is that defending the country from an aggressor is important and neglecting it may lead to even greater long-term costs.

Question 9

If the government increased defense spending by $1 million and laid off enough Justice Department employees to decrease the Department of Justice budget by $1 million,we would expect the net effect to be

Accepted Answer

Since the increase in defense spending is offset by the decrease in the Department of Justice budget, there is no net change in government spending. Therefore, there will be no change in the budget deficit.

Question 10

Since 1960 the federal budget has been in surplus in only 9 years.

Accepted Answer

The U.S. federal budget has been in surplus in only 9 years since 1960, specifically during the late 1960s and late 1990s to early 2000s.

Question 11

In Keynes' philosophy of government budgets,

Accepted Answer

In Keynes' philosophy, deficits are appropriate during recessions because they can help stimulate aggregate demand and boost economic growth. Keynes believed that during times of economic downturn, the government should increase its spending, even if it means running a deficit, in order to put money into the economy and create jobs. Once the economy has recovered, the government can then work to reduce the deficit. Therefore, the correct choice is E, deficits are appropriate during recessions.

Question 12

Because of automatic stabilizers,government budget deficits are

Accepted Answer

The answer of Because of automatic stabilizers,government budget deficits are
...

Question 13

In Keynes' philosophy of government budgets,

Accepted Answer

Keynes advocated for counter-cyclical fiscal policies, suggesting that governments should run surpluses during economic expansions to save for deficits during recessions, thereby stabilizing the economy.

Question 14

One proposal for improving the budget process is to

Accepted Answer

Switching to a two-year or biennial budget can provide more stability and continuity in the budget process, allowing for more long-term planning and reducing the potential for partisan gridlock in annual budget negotiations.

Question 15

With few exceptions,the U.S.federal government has historically run a deficit.

Accepted Answer

Since the 1940s, the U.S. federal government has generally operated with a budget deficit, meaning that its annual spending exceeds its revenue. There have been a few years where the government has run a surplus, but these have been relatively rare occurrences.

Question 16

The federal budget deficit becomes __________ during expansions because __________.

Accepted Answer

During economic expansions, the federal budget deficit typically becomes smaller because transfer payments (such as unemployment benefits) decrease due to lower unemployment, and tax revenues increase as incomes and corporate profits rise.

Question 17

Problems with the federal government budget process include

Accepted Answer

The answer of Problems with the federal government budget process...

Question 18

A continuing resolution is

Accepted Answer

A continuing resolution is a temporary extension of spending authority into the new fiscal year. It allows the government to continue operating when a new budget has not yet been passed.

Question 19

The budget deficit tends to decline during periods of recession and to increase during periods of economic recovery.

Accepted Answer

The budget deficit tends to increase during periods of recession, as government spending increases and tax revenue decreases, and to decrease during periods of economic recovery, as tax revenue increases and government spending may decrease.

Question 20

The federal budget has been in deficit in all but 9 years since 1960.

Accepted Answer

The answer of The federal budget has been in deficit...

Quiz 13: Federal Budgets and Public Policy

If for every dollar increase in farm subsidies the government decreased urban welfare payments by a dollar,we would expect the net effect to be

Some economists argue that federal government capital projects,which offer benefits over a number of years,should be financed over a number of years and therefore involve deficit finance.

If government increased Social Security benefits and decreased the salaries of government workers by the same amount,we would expect the immediate effect to be

If the U.S.government spent $20 million paying people to dig holes in 2005,and then spent $30 million paying the same people to fill the holes up again that same year,we would expect the net effect to be a(n)

With few exceptions,the U.S.federal government has historically run a balanced budget.

Suppose that government purchases of goods and services increase by $200 and at the same time lump-sum taxes are increased by $200.(It is important to note that income tax rates do not change.) Which of the following is true?

The federal budget deficit becomes during recessions because .

One rationale for the sizable wartime deficits run by the U.S.government is that the alternative to defending the country from an aggressor may involve substantial long-term costs.

If the government increased defense spending by $1 million and laid off enough Justice Department employees to decrease the Department of Justice budget by $1 million,we would expect the net effect to be

Since 1960 the federal budget has been in surplus in only 9 years.

In Keynes' philosophy of government budgets,

Because of automatic stabilizers,government budget deficits are

In Keynes' philosophy of government budgets,

One proposal for improving the budget process is to

With few exceptions,the U.S.federal government has historically run a deficit.

The federal budget deficit becomes during expansions because .

Problems with the federal government budget process include

A continuing resolution is

The budget deficit tends to decline during periods of recession and to increase during periods of economic recovery.

The federal budget has been in deficit in all but 9 years since 1960.