Question :
51) Refer to Figure 32-1. For the given budget deficit : 1384506
51) Refer to Figure 32-1. For the given budget deficit function in the diagram, the government will have a budget surplus if
A) 1 only
B) 2 only
C) 3 only
D) 1 or 2 or 3
E) 2 or 3 only
52) Refer to Figure 32-2. Initially, suppose that real GDP is $100 million and the budget deficit is $14 million, as shown by point A. Which of the following events could result in a move from point A to point B?
A) the implementation of an expansionary fiscal policy
B) the implementation of a contractionary fiscal policy
C) the implementation of an expansionary monetary policy
D) the implementation of a contractionary monetary policy
E) the economy entering into a boom
53) Refer to Figure 32-2. Initially, suppose that real GDP is $100 million and the budget deficit is $14 million, as shown by point A. Which of the following events could result in a move from point A to point C?
A) a fiscal expansion and an increase in GDP
B) a fiscal contraction and an increase in GDP
C) a fiscal expansion and a decrease in GDP
D) a fiscal contraction and a decrease in GDP
E) an increase in GDP with no change in fiscal policy
54) Refer to Figure 32-2. Initially, suppose the economy is at point A. If the government were to then implement a fiscal expansion, the cyclically adjusted budget deficit would be
A) $4 million.
B) $6 million.
C) $7 million.
D) $10 million.
E) Insufficient information to know.
55) Refer to Figure 32-2. Initially, suppose the economy is at point A on budget deficit function . If the level of potential output were 300, the cyclically adjusted budget deficit would be
A) $2 million.
B) $14 million.
C) measured by the vertical distance between the horizontal axis and (at real GDP = 300).
D) measured by the vertical distance between point A and the budget deficit that would exist at real GDP = 300 million.
E) Insufficient information to know.
56) Refer to Figure 32-2. Initially, suppose the economy is at point A on budget deficit function . If the level of potential output were 400, the cyclically adjusted budget deficit would be
A) $14 million.
B) $4 million.
C) negative.
D) -$10 million.
E) $0.
57) The government’s cyclically adjusted budget deficit (CAD) is the budget deficit that would exist
A) if real GDP were equal to potential GDP.
B) with taxes and expenditures measured at the equilibrium level of GDP.
C) if policy were changed to eliminate the business cycle.
D) if tax rates were set to maximize tax revenues.
E) if there were no discretionary fiscal interventions in the economy.
58) The best measure of the change in the stance of a government’s fiscal policy is
A) the actual budget deficit.
B) the cyclically adjusted deficit.
C) the change in the cyclically adjusted deficit.
D) the change in the actual budget deficit.
E) the change in the primary budget deficit.
59) The government’s cyclically adjusted budget deficit (CAD) adjusts for
A) any primary budget surplus or deficit incurred by the federal government.
B) changes in investment to smooth fluctuations in national income.
C) changes in spending or tax revenues caused by deviations in national income from potential output.
D) increases in the money supply in excess of the real growth in the economy.
E) interest rate changes that affect the absolute amount of debt-service payments.
60) Suppose the government’s actual budget deficit is equal to the cyclically adjusted budget deficit. Then it must be the case that
A) the primary budget deficit is zero.
B) the overall government budget is balanced.
C) the debt-to-GDP ratio is stable.
D) real GDP is equal to potential GDP.
E) the government is not reporting all of its expenses.
