Question :
61) If the economy goes into a recession, the cyclically : 1384507
61) If the economy goes into a recession, the cyclically adjusted deficit is most likely to
A) increase, because government expenditures and tax revenues will both rise.
B) increase, because government expenditures will rise and tax revenues will decline.
C) remain unchanged, although there will be a primary budget surplus.
D) remain unchanged, unless government actively changes its fiscal policy.
E) decrease, because government expenditures will decrease and tax revenues will rise.
62) Refer to Table 32-1. Consider the year 2008-2010. The fact that the actual budget deficit in each year was greater than the CAD reflects the fact that
A) output was equal to potential.
B) fiscal policy was contractionary over that time.
C) fiscal policy was expansionary over that time.
D) actual GDP was less than potential in each of those years.
E) actual GDP was greater than potential in each of those years.
63) Refer to Table 32-1. Consider the year 2004. Based on the data in the table we can conclude that
A) fiscal policy was expansionary in that year.
B) real output was less than potential in that year.
C) real output was equal to potential in that year.
D) real output was greater than potential in that year.
E) monetary policy was expansionary in that year.
64) Refer to Table 32-1. Based on the data in the table, in which of the following years was output greater than potential?
A) 1999
B) 2004
C) 2000
D) 2008
E) 2010
65) Refer to Table 32-1. Based on the data in the table, over which of the following intervals was fiscal policy expansionary?
A) 1999-2003 because the CAD is falling
B) 1999-2003 because the CAD is rising
C) 2008-2010 because the actual deficit is greater than zero
D) 2004-2007 because the CAD is fairly stable
66) Consider the following variables, defined as follows:
A) Δd = x + (r – g) + d
B) Δd = x + (r – g) × d
C) Δd = x(r – g) + d
D) Δd = x(g – r) – d
E) Δd = x + (g – r) × d
67) Consider a government with a positive stock of debt. If the growth rate of real GDP exceeds the real rate of interest on government bonds, then to keep the debt-to-GDP ratio constant the
A) government must have a primary budget deficit.
B) government must have a primary budget surplus.
C) government must implement an expansionary fiscal policy.
D) money supply should be increased at a constant rate.
E) nominal interest rate must be constant.
68) Consider a government with a positive stock of debt, and suppose the real interest rate on government bonds equals the rate of growth of real GDP. In this case, the government’s debt-to-GDP ratio will rise only if
A) the debt-to-GDP ratio is already high.
B) the primary budget surplus exceeds the overall budget surplus.
C) the real interest rate is high.
D) there is an overall budget deficit.
E) there is a primary budget deficit.
69) Consider changes in the government’s debt-to-GDP ratio. Suppose that over a one year period the government has a primary budget surplus, and the real interest rate on government bonds is higher than the growth rate of real GDP. What is the effect on the debt-to-GDP ratio?
A) it will rise
B) it will fall
C) uncertain – it is necessary to know the relative size of the different effects
D) it will remain stable – the two effects cancel each other out
70) Suppose the real interest rate on government bonds is 5% while the growth rate of real GDP is 4%, and that the government’s current debt-to-GDP ratio is 30%. If the government has a primary budget balance of zero in the current year, the debt-to-GDP ratio will
A) rise by 3.0 percentage points.
B) rise by 0.3 percentage points.
C) remain unchanged.
D) fall by 3.0 percentage points.
E) fall by 0.3 percentage points.
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