Which of the following relationships is correct? O actual budget deficit = structural deficit + cyclical deficit O cyclical deficit actual budget deficit + structural deficit O actual budget deficit cyclical deficit - structural deficit cyclical surplus = actual budget deficit - cyclical deficit O actual budget deficit = structural deficit - cyclical deficit

Which of the following relationships is correct? O actual budget deficit = structural deficit + cyclical deficit O cyclical deficit actual budget deficit + structural deficit O actual budget deficit cyclical deficit - structural deficit cyclical surplus = actual budget deficit - cyclical deficit O actual budget deficit = structural deficit - cyclical deficit

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter18: Six Debates Over Macroeconomic Policy

Section: Chapter Questions

Problem 6PA

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The figure shows government expenditure and revenue as a percentage of GDP, 1990-2019. During which of the following periods did the federal government run a budget surplus? 27.0% 25.0% -Expenditures 23.0% 21.0% 19.0% Receipts 17.0% 15.0% YEAR O 1998-2001 None of these answers is correct. O 2003-2008 2012-2018 PERCENT OF GDP 0661 1991 1993 1994 9661 2661 6661 0007 2002 2003 2005 9007 2008 6007 2011 2012 2014 2015 2017 2018
5. Demand side fiscal policy is also known as Keynesian Economic Theory * O True O False
We would expect Canada's cyclical deficit or surplus to equal zero when Select one: O A. the primary budget deficit is zero. O B. the government is not reporting all of its expenses. O C. the overall government budget is balanced. O D. the debt-to-GDP ratio is stable. O E. the economy is at full employment.
To correct for inflation when calculating real debt, one must: O b. O c. add the inflated debt and the nominal budget deficit. assume that real debt is zero. multiply the percentage change of debt by the inflation rate. O d. deduct the amount of inflated debt from the nominal budget deficit.
13. Which fiscal policy would make a budget surplus larger or a budget deficit smaller? O lower taxes O increase in government purchases of goods and services O lower government transfers O higher interest rates
Suppose that the debt-to-GDP ratio is 0.53, the real interest rate on the debt is 6%, and the growth rate of real GDP is 3%. What is the maximum primary deficit or surplus (as a percentage of GDP) that the government can run and not increase the debt-to-GDP ratio? O A. 1.59% surplus O B. 1.59% deficit OC. 3.18% surplus O D. 3.18% deficit
Suppose that during a crisis, the actual primary deficit has continuously remained less than the cyclically adjusted primary deficit. Other things being equal, for debt to remain sustainable, which of the following is true? а. The economy will have to run a larger budget surplus; O b. If the cyclical deficit is very large, the actual deficit will have to be even lower than it is; O c. None of the other answers; O d. The economy will have to run a larger cyclical surplus after the crisis; е. The cyclical deficit will have to decrease;
9- When expectations are taken into account, a policy to reduce budget deficit may not lead to a fall in output in the current period. Which of the followings cannot be listed as factor that offsets the detrimental impact of fiscal contraction on the output in the short run? a) O Increasing tax rates harshly to finance deficit. b) O Credibility of the deficit reduction program. c) O Cutting wasteful spending and leaving room for future tax cuts. d) O Backloading the deficit reduction, leaving larger cuts in government spending to the future while only small cuts today. 11 - Suppose government implements an unexpected tax increase. However, as a result of that unexpected fiscal contraction, the central bank worries about "recession" and plans to respond that by reducing the policy rate. Given this information, we would expect that a) Oif output remain unchanged, this policy will have an ambiguous effect on stock prices. b) O if output remain unchanged, stock prices will rise. c)O if…
The Canadian government spending in recent years has resulted in persistent deficits. This has made it so that they have had to increase borrowing. They must be careful since this will lead to Select one: O a Crowding out O b. Transfer payments Oc. Implicit liabilities Od Automatic stabilizers Examples of automatic stabilizers set up in the economy would be everything listed EXCEPT for: Select one: O a. Child daycare benefits b. The prices of goods O c. Income Taxes O d. Unemployment payments Clear my choice
D₂ Which of the following movements would be consistent with the government budget going from deficit to surplus and the simultaneous enactment of an investment tax credit? O a movement from Point A to Point C a movement from Point B to Point A O a movement from Point B to Point F a movement from Point C to Point B
It can be argued that a government budget deficit, rather than being a burden for future generations, may provide net benefits to future generations. This view is correct if the current budget deficit is used to... O a Pay transfers such as welfare and old age pensions in the present period. O b. Ensure that all interest paid goes to residents rather than foreigners. O c. Finance projects that deliver long-term benefits to society. O d. Invest in the purchasing of goods not available in the local economy O e. Pay subsidies to Canadian firms to offset rising energy costs.
If the economy's full-employment output is $5 trillion, actual output is $5 trillion, and the budget deficit is $13 billion, the deficit in this case is known as a O A) Full employment deficit. O B) Cyclical deficit. O C) Structural deficit.