MACROECONOMICS
14th Edition
ISBN: 9781337794985
Author: Baumol
Publisher: CENGAGE L
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Question
Chapter 16, Problem 2TY
To determine
To Explain: The reason for actual budget being in deficit while the structural budget shows surplus.
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Students have asked these similar questions
Explain in words why the structural budget might show a surplus while the actual budget is in deficit. Illustrate your answer with a diagram like Figure 6 in the textbook Chapter 32.
Which of the following best describes a fiscal policy tool?
1. Government spending
II. Government taxes
III. Interest rates.
IV. Bank lending
V. Financial capital markets
I and II
I and VI
III, IV, and V
Discuss the federal budget of the U.S government. should it always be balanced? when is the most appropriate time economically speaking for the federal budget be in a deficit? as a borrower how is the federal government different from the average U.S adult?
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Similar questions
- Differentiate between the following terms:a. a budget deficit. b. the government debt. c. a budget surplus d. a balanced budget.arrow_forwardDoes a balanced budget multiplier of one suggests that the government can stimulate economic growth without changing the size of the budget deficit or surplus?arrow_forwardIf tax cuts don't cause enough economic growth, we might also need to reduce expenditures to reduce the deficit. Explain?arrow_forward
- Most economists argue that we should not strive to balance the budget on an annual basis and prefer to look at the structural budget. Some point out Hoover’s tax folly to emphasize their point. Explain what they are talking about.arrow_forwardPls help with below homework. In 1995, a proposed constitutional amendment that would require a balanced budget passed the U.S. House of Representatives by a wide margin and failed in the U.S. Senate by only one vote. As a result, the U.S. federal government doesn't have to run on a balanced budget by law, but a number of economists argue it should. What are some of the arguments that economists use to claim that a balanced budget is a good idea? What are the economic arguments presented by balanced budget opponents?arrow_forwardDefine saving and investment. Data for the simple economy of Newt show that in 2011, saving exceeded investment and the government is running a balanced budget.What is likely to happen ? What would happen if the government were running a deficit and saving were equal to investment ?arrow_forward
- Complete the following sentence. As it relates to fiscal policy, a budget deficit exists when:Choose one answer.a. the government receipts are greater than its expenditures. b. the government expenditures are greater than its receipts. c. the government expenditures are equal to its receipts. d. the national debt is less than the yearly revenue.arrow_forwardA friend of yours argues that federal government spending is out of control and significant cuts in spending are needed to reduce the size of the government. She tells you that if we cut federal government spending on research and foreign aid, it will really reduce the size of the government. Refer to Figure 2 in the text for information on the budget. a. What percentage of federal government spending comes from research and foreign aid? b. How much will the federal government spend on research and foreign aid if the federal government's total spending is $1.2 trillion.arrow_forwardThe use of government spending and taxation to affect aggregate demand are examples of fiscal policy. Explain how fiscal policy influences the economic growth of a country?arrow_forward
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