ECON 2133 Study Guide - Midterm Guide: Procyclical And Countercyclical, Dot-Com Bubble, Equal Pay For Equal Work

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emeraldbeaver977

14 Mar 2017

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The sum total of all outstanding treasury securities issued to finance past budget deficits that have not been paid back in a fiscal year (october 1 - september 30) Accumulation of so much per unit per kind over time. Government spending = tax revenues it is a balanced budget (1969) Government spending > tax revenues it is a federal budget deficit. Government spending < tax revenues it is a surplus (1998, 1999, 2000) The national debt is the stock variable. Asymmetry between deficits and surpluses for changing the debt: Deficits always make the debt go down, but surpluses do not always make the debt go down. When there is a deficit the debt will increase; when there is surplus, we can increase spending, cut taxes, or pay back part of the national debt (did all of these in 1998, 1999, and 2000) Considers taxation and debt to be equivalent methods of financing government activity.

Related Questions

1. The government has a balanced budget when the economy is at full employment. When the economy weakens, tax revenue ________ and spending on transfers _________. This causes a ____________ ______________.

2. Social Security has revenues of $1.8 trillion and expenditures of $1.3 trillion. The nonsocial Security budget has revenue of $2.1 trillion and expenditures of $2.4 trillion. The official budget will report a _______________ (deficit/surplus) of $___________________. The national debt will ____________ (rise/ fall) by $______________.

Answer True or False for each of the following.

In recent years government debt grew much faster than GDP.

Conservative economists blame repealing Glass-Steagall for the financial crisis.

In the last few years, the US has run the largest nominal deficits in US history.

Foreigners own more of the national debt today than 40 years ago

The Great Recession results in part from rapidly rising oil prices.

Subprime mortgages are those made at interest rates below the prime rate.

Economists agree that de-regulation lay behind the financial crisis.

Credit deposit swaps are mortgage-based derivatives.

Social Security runs completely out of money and canât pay benefits by 2018.

The national debt to GDP ratio in the U.S. has never been higher than right now.

ceruleancrow374

Many economic analysts, including those at the US Congressional Budget Office, have forecasted growing US federal budget deficits. NOTE: The budget deficit is defined as the difference between all government expenditures and all government revenues - G-T. The size of the deficits grew after the enactment of the "Tax Cut and Jobs Act" in 2017.

As members of a team that is advising the US government, you are tasked with developing a plan which reduces the budget deficit by 1 trillion dollars over the forecast horizon specified: The starting year will be 2019 and your ending year will be 2028. To do so, you will have to recommend spending reductions, tax increases, or some combination thereof, over the years between the current year and the end of the horizon.

Q. To achieve the specified deficit reduction target ($1 trillion), decide the composition of the adjustmentsâhow much tax, how much spending. Briefly discuss why you made your choices; you may introduce political considerations.

amethystarmadillo770

You hear on the nightly news that the president has vowed to decrease the nation's debt. Both the government and private citizens will have to buckle down and learn to do without, he says.

In order to reduce its debt, a nation must:

A.	run lower deficits.
B.	decrease tax rates.
C.	run lower surpluses.
D.	increase in government spending.

Debt reduction will result in:

A.	more public works projects, higher transfer payments, and more money available for households to spend.
B.	fewer public works projects, higher transfer payments, and more money available for households to spend.
C.	more public works projects, lower transfer payments, and less money available for households to spend.
D.	fewer public works projects, lower transfer payments, and less money available for households to spend.

A friend of yours looks at the state of the U.S. debt in 2011 and tells you, Since the debt is so high, we must be running an incredibly large deficit every year. Your friend's analysis is:

A.	not valid, because the debt is always changing even when deficits are the same.
B.	not valid, because the debt can be high even when the deficit for an individual year is small.
C.	valid, because the debt is always changing even when deficits are the same.
D.	valid, because the public debt is the sum of all deficits and surpluses run by the government over time and can be high even when the deficit for an individual year is small.

Assume that the government in some nations intended to respond to low employment via fiscal policy.

a. What type of policy would this require?

A.	A contractionary fiscal policy designed to decrease the aggregate demand curve.
B.	An expansionary fiscal policy designed to decrease the aggregate demand curve.
C.	An expansionary fiscal policy designed to increase the aggregate demand curve.
D.	A contractionary fiscal policy designed to increase the aggregate demand curve.

b. Assume that this policy ended up having an undesirable outcome. How could this happen in terms of formulation and implementation lags?

A.	This could happen if the implementation lag exceeded the formulation lag.
B.	This could happen if the formulation lag exceeded the implementation lag.
C.	This could happen if the formulation lag and the implementation lag exceeded the expansion.
D.	This could happen if the formulation lag and the implementation lag exceeded the recession.

Econo Nation started 2008 with no national budget debt or surplus. By the end of 2008, it had a budget surplus of $286 million; in 2009, it had a budget deficit of $-425 million; in 2010, it had a budget surplus of $100 million, and the amount of its budget deficit or surplus in 2011 is unknown. If at the end of 2011 Econo Nation's national debt totalled $52 million, determine the deficit or surplus in 2011.

Instructions: Enter your answer as a whole number and include a negative sign if there is a deficit.

Period	Deficit (-) or surplus (+)
Beginning of 2008	$0
End of 2008	$286 million
2009	$-425 million
2010	$100 million
End of 2011	_______ million

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ECON 2133 Study Guide - Midterm Guide: Procyclical And Countercyclical, Dot-Com Bubble, Equal Pay For Equal Work

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