Question11 (1 point)

Economists refer to a budget deficit that exists when theeconomy is achieving full employment as a:

Question 11 options:

	natural deficit.
	cyclical deficit.
	nonrecurring deficit.
	cyclically adjusted deficit.

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Question12 (1 point)

Which of the following is the best example of publicinvestment?

Question 12 options:

	Salaries of senators and representatives.
	Government expenditures on food stamps.
	Funding of regulatory agencies.
	Construction of highways.

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Question13 (1 point)

Built-in stability means that:

Question 13 options:

	Congress will automatically change the tax structure andexpenditure programs to correct upswings and downswings in businessactivity.
	government expenditures and tax receipts automatically balanceover the business cycle, though they may be out of balance in anysingle year.
	an annually balanced budget will offset the procyclicaltendencies created by state and local finance and thereby stabilizethe economy.
	with given tax rates and expenditures policies, a rise indomestic income will reduce a budget deficit or produce a budgetsurplus while a decline in income will result in a deficit or alower budget surplus.

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Question14 (1 point)

Which of the following fiscal policy actions is most likely toincrease aggregate supply?

Question 14 options:

	An increase in government spending on infrastructure thatincreases private sector productivity.
	An increase in transfer payments to unemployed workers.
	An increase in personal income tax rates.
	A reduction in interest rates that encourages consumers topurchase more durable goods.

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Question15 (1 point)

An effective expansionary fiscal policy will:

Question 15 options:

	increase the cyclically adjusted deficit but reduce the actualdeficit.
	reduce the cyclically adjusted deficit.
	reduce a cyclical deficit but necessarily increase the actualdeficit.
	always result in a balanced actual budget once full employmentis achieved.

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Answer rating: 100% (QA)

The detailed answer for the above question is provided below Question 11 b Cyclical deficit Explanation A cyclical deficit is a budget deficit that exists when the economy is achieving full employment ... View the full answer