One problem with fiscal policy is that it can lead to crowding out. Crowding out  is defined as: Select one: A. That part of public expenditure financed from borrowing B. Increased taxes pushing up interest rates C. Increased demand for money pushing up interest rates resulting in lower C and I D. Increased public spending feeding through to adverse exchange rate movements

What causes the “crowding-out effect”?   Group of answer choices Government borrowing and spending Foreign firms dominating the domestic economy Excessive importation of goods and services Private consumption

Suppose a government has no debt and a balanced budget. Suddenly it decides to spend $5 trillion while raising only $4 trillion worth of taxes. Instructions: Enter your responses rounded to one decimal place. a. What will be the government's deficit? 24 1000 billion b. If the government finances the deficit by issuing bonds, what amount of bonds will it issue? $4 1000 billion C. At a 3 percent rate of interest, how much interest will the government pay each year? $4 30 billion d. Add the interest payment to the government's $5 trillion expenditures for the next year, and assume that tax revenues remain at $4 trillion. In the second year, compute the () Deficit: $ billion (ii) Amount of new debt (bonds) issued to finance the deficit in the second year: $ billion (iii) Total debt at the end of the second year: $ billion (iv) Debt service requirement: $ billion < Prev 5 of 5 Next W tv N FEB 877 9.

All of the following rules are effective in reducing the budget deficit except: A. spending caps B. inflation targeting C. Constitutional amendments D. PAYGO rules

if the government budget deficit equals $240 billion and the money supply increases by $100 billion, how much must the government borrow

In 2010, the country of Lykesville had a balance budget, no debt, and its GDP was $31500. In 2011, it spent $11500 and had $100000 in tax revenue, and its GDP in creased to $37500. In 2012, it spent $13500 and had $13000 in tax revenue, and its GDP further increased to $37500. Did Lykesville runa  budget deficit or budget surplus in 2012? What was Lykesville's Debt-GDP ration, expressed as a % at the end of 2012?

Consider the list of situations below faced by an imaginary country that is suffering an economic crisis. Classify each situation as either a result of discretionary fiscal policy or an automatic stabilizer in the economy. 1. Higher government spending in unemployment benefits due to a rise in the number of unemployed people II. A decrease in tax collection due to a decrease in business profits III. Higher public spending due to the introduction of a new emergency credit line for businesses, subsidized by the government IV. Smaller tax revenue resulting from an increase in the amount of households that fall under the poverty line V. Smaller tax revenue due to the approval of a bill that provides tax cuts for small businesses Group of answer choices A. Situations III and V are discretionary fiscal policy, and I, II and IV are automatic stabilizers B. All the situations above are automatic stabilizers C. All the situations above are automatic stabilizers, except for V D. Situations I and…

What is a default on the national debt?   A. The Federal Reserve purchases Treasurys issued by the federal government. B. The federal government buys back its own debt from the holders of United States Treasuries by having the Treasury print money. C. The holders of United States Treasurys forgive the debt and provide the government with cash. D. The federal government declares bankruptcy or restructures the payments on its debts with the lenders.

To maintain a balanced budget during a recession, what should the government do? Group of answer choices Decrease taxes, increase transfer payments, and/or decrease government spending Increase taxes, increase spending, and/or increase transfer payments Increase taxes, decrease transfer payments, and/or decrease government spending. Decrease taxes, decrease government spending, and/or decrease transfer payments

Is rising national debt is harmful to the U.S economy?