C) Briefly explain the difference between the deficit of the Federal government and the National debt of the United States.
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If the federal government were to run a budget deficit, this would:
a. reduce the size of the national debt.b. leave the size of the national debt unchanged.c. increase the national debt only if the government also expands the supply of money.d. increase the size of the national debt.
Assume the Federal government runs a budget deficit in the current fiscal year.
A. How can the Federal government fund the deficit?
B. If the Federal government decides to issue U.S. Treasury securities to fund the deficit, what happens to the level of the national debt, all else held constant?
C. Assuming the Federal government and firms compete for the same saversβ dollars in the loanable funds market, what is likely to happen to interest rates?
D. Given your answer in (iii) above, is crowding out more or less likely to occur if the deficit is funded by Treasury securities? Explain.
When the U.S. government spends more than it receives within a fiscal year, this is called the
A. National debt.
B. Fiscal debt.
C. Federal deficit.
D. Economic debt
E. Consumer debt.