Question : 31) Consider two economies, A and B. Economy A has : 1384504

31) Consider two economies, A and B. Economy A has a stock of government debt equal to $800 billion, while Economy B has a stock of government debt equal to $22 billion. In order to determine the economic importance of these government debt loads in the respective economies, it is necessary to know ________ for each economy.

A) the level of government expenditures

B) the net tax rate

C) the primary budget deficit

D) the GDP

E) the stance of monetary policy

32) The Canadian federal debt-to-GDP ratio reached a post Second World War high of about ________% in 1996. By 2008-2009, before the onset of the recent recession, the debt-to GDP ratio had ________%.

A) 80; risen to 110

B) 50; fallen to 0

C) 40; fallen to less than 10

D) 110; fallen to 50

E) 70; fallen to about 30

33) The Canadian federal government’s net debt as a percentage of GDP is forecast to be about 30% by 2015. The historic high for this ratio in Canada was

A) 70% in 1996 due to large and persistent deficits throughout the 1970s.

B) 70% in 1982 due to the OPEC oil shock in the mid 1970s and the severe inflation that followed.

C) 110% in 1946 as a result of Canada’s participation in the Second World War.

D) 52% in 2012 due to the fiscal expansion following the global financial crisis.

E) 90% in the late 1960s due to massive infrastructure projects in progress across Canada.

34) Consider two economies, A and B. Economy A has a stock of government debt equal to $800 billion and a debt-to-GDP ratio of 10%. Economy B has a stock of government debt equal to $22 billion and a debt-to-GDP ratio of 80%. What is the GDP for each economy?

A) Economy A: GDP = $8 trillion

B) Economy A: GDP = $80 billion

C) Economy A: GDP = $80 trillion

D) Economy A: GDP = $800 billion

E) Economy A: GDP = $8 trillion

35) The Canadian federal government’s debt-to-GDP ratio climbed steadily from

A) 1939 to the late 1980s.

B) 1960 to the late 1990s.

C) 1975 to the mid 1990s.

D) 1995 to 2009.

E) 2000 to 2009.

36) In every year between 1998 and 2008, the Canadian federal government had a

A) budget deficit, indicating that even deep cuts in government spending were not sufficient to alleviate the problem.

B) primary deficit, indicating that tax revenues were insufficient to cover discretionary government expenditures.

C) budget deficit, which contributed to a growing stock of government debt.

D) primary surplus but overall deficit, indicating that tax revenues were more than sufficient to cover discretionary government expenditures.

E) budget surplus, indicating that tax revenues were more than sufficient to cover total government expenditures.

37) The Canadian federal government had a budget surplus each year from ________ until 2008.

A) 1945

B) 1967

C) 1987

D) 1998

E) 2000

38) The budget deficit function is graphed with the budget deficit on the vertical axis and ________ on the horizontal axis, and is ________.

A) real GDP; downward sloping

B) real GDP; upward sloping

C) the interest rate; downward sloping

D) the interest rate; upward sloping

E) the interest rate; horizontal

39) Consider the government’s budget deficit function. With an unchanged fiscal policy by government, an increase in GDP tends to ________ net tax revenues and thus ________ the budget deficit.

A) raise; raise

B) raise; lower

C) lower; raise

D) lower; lower

E) lower; leave unchanged

40) Consider the budget deficit function. With an unchanged fiscal policy by government, an increase in national income causes ________ the budget deficit function.

A) an upward movement along

B) a downward movement along

C) an upward shift of

D) a downward shift of

E) a downward rotation in