Question :
1) What the difference between the government’s debt and the : 1384501
1) What is the difference between the government’s debt and the government’s deficit?
A) The debt is the accumulation of past deficits whereas the deficit is the annual shortfall between revenues and disbursements.
B) The debt is the annual shortfall of revenues minus disbursements whereas the deficit is the accumulation of past debts.
C) The debt is the amount the government pays in interest payments whereas the deficit has not yet incurred interest charges.
D) The debt is the amount payable to the Bank of Canada whereas the deficit is the annual shortfall of revenue minus disbursements.
E) The debt is the difference between tax revenues and government expenditures whereas the deficit is the difference between tax revenues and borrowing.
2) A simple equation describing the government’s budget constraint is
A) government expenditure = tax revenue – borrowing.
B) government expenditure = tax revenue + borrowing.
C) government expenditure = tax revenue + debt-service payments.
D) tax revenue = government expenditure + borrowing.
E) tax revenue = borrowing – government expenditure.
3) Consider the following variables:
A) (G + iD) = borrowing – T
B) (G + iD) – T = borrowing
C) (G + iD) + T = borrowing
D) G – T – (iD) = borrowing
E) (G – iD) = borrowing + T
4) Consider the following variables:
A) ΔD = (G + iD) – T
B) ΔD = (G – iD) + T
C) deficit = D – (G + iD) + T
D) deficit = D – T + (G + iD)
E) T = ΔD – (G + iD)
5) In any given year, the government’s debt-service payments are
A) equal to the annual budget deficit.
B) equal to the annual primary budget deficit.
C) the interest payments on the outstanding stock of government debt.
D) not related to the government deficit.
E) not required unless the debt is held by foreigners.
6) In any given year, the government’s debt-service payments are equal to
A) (fiscal borrowing) × (the interest rate)
B) (government spending) × (the interest rate)
C) (government spending – tax revenue) × (the interest rate)
D) (total outstanding government debt) × (the interest rate)
E) (government spending + tax revenue) × (the interest rate)
7) Consider the government’s budget constraint. The accumulated stock of government debt will begin to fall
A) if the government’s debt-service payments are zero.
B) if the government does not borrow money.
C) if the growth rate of real GDP is higher than the real interest rate.
D) when the government’s annual budget is in deficit.
E) when the government’s annual budget is in surplus.
8) The government’s annual primary budget deficit is equal to the
A) accumulation of government borrowing.
B) decrease in the stock of government debt during the course of a year.
C) excess of government’s program expenditures over tax revenues in a given fiscal year.
D) total amount of government spending on program expenses, personnel, and capital outlays.
E) excess of current revenue over current expenditure.
9) Do we get a useful and meaningful statistic by dividing the national debt by the GDP?
A) No — we are essentially “dividing apples by oranges,” which is unhelpful.
B) No — the GDP is not a meaningful measure of the well-being of the economy.
C) Yes — we can then see how much of the national debt is owed by each individual citizen.
D) Yes — we can see the burden of the debt in relation to the size of the economy.
E) No — dividing a stock by a flow can never be sensible.
10) The government’s primary budget deficit (or surplus) is the
A) non-interest expenditures and interest payments.
B) sum of total government expenditures and revenues.
C) sum of interest payments and revenues.
D) total budget deficit between two fiscal years.
E) total budget deficit (or surplus) excluding debt-service payments.
