Question :
11) The government’s primary budget deficit (or surplus) the difference : 1384502
11) The government’s primary budget deficit (or surplus) is the difference between the
A) non-interest expenditures and interest payments.
B) interest payments and revenues.
C) total budget deficit (or surplus) and debt-service payments.
D) total budget deficit (or surplus) between one year and the next.
E) total government expenditures and revenues.
12) The federal government’s “primary budget deficit”
A) includes domestic borrowing but excludes foreign borrowing.
B) excludes debt-service payments.
C) is the amount of government borrowing in a fiscal year.
D) is the amount of tax revenue minus the amount of interest paid on the public debt.
E) is the most important indicator of the level of government spending.
13) Consider the federal government’s budget constraint. If the government’s total budget deficit is $27 billion and its debt-service payments are $29 billion, then its
A) primary budget deficit is $2 billion.
B) primary budget deficit is $56 billion.
C) primary budget surplus is $2 billion.
D) primary budget surplus is $56 billion.
E) Not enough information to determine.
14) Suppose that in Year 2 there was a higher federal budget deficit than in Year 1. This could be explained by ________ in Year 2.
A) lower real interest rates.
B) higher real GDP (with fiscal policy constant)
C) lower real GDP (with fiscal policy constant)
D) lower government expenditure (with real GDP constant)
E) a lower primary budget surplus
15) The extent to which tax revenues are able to finance the discretionary part of total government expenditure is best measured by the
A) cyclically adjusted deficit/surplus.
B) government’s current fiscal policy.
C) debt-to-GDP ratio.
D) government’s primary budget deficit or surplus.
E) tax-to-GDP ratio.
16) When a government changes its fiscal policy, it is
A) changing the exchange rates to change national income.
B) increasing the money supply to increase national income.
C) changing government spending and/or tax rates to achieve some objective
D) using government spending and taxes together with changing the money supply in order to achieve full employment.
E) buying and selling private bonds to increase or decrease the overnight lending rate.
17) If we want to know whether tax revenues are sufficient to finance the discretionary part of government expenditure, which of the following measures should we analyze?
A) the cyclically adjusted deficit/surplus
B) the government’s budget constraint
C) the debt-to-GDP ratio
D) the government’s primary deficit/surplus
E) the interest rate on government bonds compared to the growth rate of real GDP
18) If voters want to know how their tax dollars are being spent and how the federal government is managing its current spending, they should look at
A) federal/provincial tax transfers.
B) changes in the money supply.
C) the primary budget balance.
D) the overall budget balance.
E) the inflation adjusted deficit.
19) Suppose the stock of government debt in Canada at the end of one fiscal year is $475 billion. If the stock of debt falls to $461 billion by the end of the next fiscal year, then we know that in that year
A) the government had a primary budget surplus of $14 billion.
B) the government had a primary budget deficit of $14 billion.
C) tax revenues increased by $14 billion.
D) the government had an annual budget surplus of $14 billion.
E) debt-service payments fell by $14 billion.
20) Suppose the stock of government debt in Canada at the end of one fiscal year is $475 billion. If the stock of debt falls to $461 billion by the end of the next fiscal year, and debt-service payments during that year were $38 billion, then we know that the government had
A) a primary budget surplus of $52 billion.
B) a primary budget surplus of $14 billion.
C) a primary budget surplus of $24 billion.
D) an annual budget surplus of $38 billion.
E) an annual budget deficit of $14 billion.
