If the government runs a budget deficit, it means that:
Government spending exceeds government revenue
Government revenue exceeds government spending
Government revenue and spending are equal
Taxes are too high
Correct Answer :
A. Government spending exceeds government revenue
Related Questions
The term money multiplier refers to:
The ratio of the change in the money supply to the change in the monetary base
The ratio of government spending to the level of GDP
The ratio of taxes to disposable income
The ratio of investment to savings in an economy
Which of the following is a measure of the overall level of prices in an economy?
Consumer Price Index (CPI)
Gross Domestic Product (GDP)
Money Supply (M2)
Aggregate Demand (AD)
The term monetary base refers to:
The total amount of money in circulation in an economy
The total amount of money held by banks as reserves
The total amount of money held by households and businesses
The total amount of money created by the central bank
The term commodity money refers to:
Money that has intrinsic value, such as gold or silver
Money that is backed by the government's promise to exchange it for a commodity
Money that is used for international trade
Money that is created by the central bank
The term open market operations refer to:
The buying and selling of government securities by the central bank to influence the money supply
The buying and selling of goods and services in international markets
The buying and selling of stocks in the stock market
The buying and selling of consumer goods in a free market economy
The term commodity bundle in economics refers to:
A collection of goods and services used to calculate inflation
A collection of goods and services that a consumer typically buys
A collection of goods and services used to calculate GDP
A collection of goods and services produced in a specific industry
If the nominal interest rate is 5% and the inflation rate is 3%, the real interest rate is:
8%
2%
3%
5%
The Federal Reserve's main tool for controlling the money supply is:
Open market operations
Reserve requirements
Discount rates
Government spending
The term automatic stabilizers refers to:
Government policies that automatically adjust to stabilize the economy during economic fluctuations
The tools used by the central bank to stabilize the money supply
The policies implemented by the government to control inflation
The policies implemented by the government to control unemployment
If the government implements contractionary fiscal policy, it will likely lead to:
Lower inflation and lower economic growth
Higher inflation and higher economic growth
Higher inflation and lower economic growth
Lower inflation and higher economic growth
If the government decreases taxes and increases government spending, it is implementing:
Expansionary fiscal policy
Contractionary fiscal policy
Expansionary monetary policy
Contractionary monetary policy
The term stagflation refers to a situation where:
There is high inflation and high unemployment simultaneously
There is low inflation and low unemployment simultaneously
There is high inflation and low unemployment simultaneously
There is low inflation and high unemployment simultaneously
The natural rate of unemployment is:
The level of unemployment that occurs when the economy is at full employment
The level of unemployment that occurs when the economy is in a recession
The level of unemployment that occurs when there is no frictional or structural unemployment
The level of unemployment that occurs when there is no cyclical unemployment
Which of the following is a component of aggregate supply?
Consumption
Government spending
Investment
Wages and salaries
If the government runs a budget deficit, it means that:
Government spending exceeds government revenue
Government revenue exceeds government spending
Government revenue and spending are equal
Taxes are too high
Which of the following is an example of fiscal policy?
The Federal Reserve adjusting interest rates
The government increasing spending on infrastructure projects
The government selling bonds to the public
The central bank conducting open market operations
The term opportunity cost of capital refers to:
The return that could have been earned if the capital was used in an alternative investment
The total cost incurred in producing a good or service
The cost of goods and services in an open economy
The total cost of producing all units of a good or service
The term supply-side economics focuses on:
Policies that aim to increase aggregate demand in the economy
Policies that aim to increase the productive capacity of the economy
Policies that aim to control inflation through monetary policy
Policies that aim to control inflation through fiscal policy
The term circular flow of income refers to:
The continuous flow of goods and services between households and firms in an economy
The circular flow of money between households and firms in an economy
The circular flow of resources between households and firms in an economy
The circular flow of exports and imports in an open economy
The concept of crowding out refers to:
The decrease in private spending that occurs as a result of an increase in government spending
The increase in private investment that occurs as a result of government borrowing
The decrease in government spending that occurs during a recession
The increase in government spending that occurs during a boom
The term money market refers to:
The market for financial assets with maturities of one year or less
The market where foreign exchange rates are determined
The market for long-term government bonds
The market for commodities like gold and silver
The long-run aggregate supply curve is vertical because it is determined by:
The level of government spending
The level of potential output
The level of aggregate demand
The level of inflation
The term velocity of money refers to:
The speed at which money changes hands in an economy
The total amount of money in circulation in an economy
The total amount of money held by households and businesses
The total amount of money held by banks as reserves
The term monetary policy transmission mechanism refers to:
The process through which changes in monetary policy affect the overall level of economic activity
The process through which changes in fiscal policy affect the overall level of economic activity
The process through which changes in exchange rates affect the overall level of economic activity
The process through which changes in international trade affect the overall level of economic activity
The term capital gains tax is a tax on:
Profits earned from selling an asset, like a stock or real estate, at a higher price than it was purchased
Profits earned from producing and selling goods and services
Wages earned from labor
Interest earned from savings accounts
Which of the following is a tool of monetary policy used by the Federal Reserve?
Open market operations
Government spending
Taxation
Fiscal stimulus
The term marginal propensity to consume (MPC) refers to:
The change in consumption resulting from a change in disposable income
The total amount of consumption in an economy
The change in investment resulting from a change in interest rates
The total amount of saving in an economy
The term Laffer curve is used to illustrate the relationship between:
Tax rates and tax revenue
Government spending and economic growth
Inflation and unemployment
Interest rates and investment
The money supply is primarily determined by:
The Federal Reserve
Commercial banks
The Treasury Department
The President of the United States
The term market equilibrium refers to a situation where:
The quantity supplied is equal to the quantity demanded in a market
The quantity supplied exceeds the quantity demanded in a market
The quantity demanded exceeds the quantity supplied in a market
The price level is constant in a market