To evaluate the size of the federal budget deficit or surplus over time, it would be best to look at the
A) budget deficit or surplus as a percentage of tax revenues.
B) budget deficit or surplus as a percentage of government spending.
C) absolute size of the budget deficit or surplus.
D) budget deficit or surplus as a percentage of GDP.
Ques. 2Does the saving and investment equation imply that a country's national saving must always equal its domestic investment? Explain.
What will be an ideal response?
Ques. 3If Congress and the president pursue an expansionary fiscal policy at the same time as the Federal Reserve pursues an expansionary monetary policy, how might the expansionary monetary policy affect the extent of crowding out in the short run?
What will be an ideal response?
Ques. 4Japan has a fairly high saving rate and the level of saving in Japan is above domestic investment. Use the saving and investment equation to explain what Japan is doing with this excess of saving above domestic investment.
What will be an ideal response?
Ques. 5Why will there be less crowding out of private spending by government spending the less sensitive consumption, investment, and net exports are to changes in interest rates?
What will be an ideal response?
Ques. 6Saving exceeds domestic investment in Japan, which generates a financial account deficit in Japan's balance of payments.
Indicate whether the statement is true or false
Ques. 7An increase in net foreign investment is possible through a decrease in national saving or a decrease in domestic investment.
Indicate whether the statement is true or false
Ques. 8An increase in government spending will force an appreciation of the dollar, which causes net exports to fall.
Indicate whether the statement is true or false
Ques. 9As spending on government purchases increases, income rises and money demand falls.
Indicate whether the statement is true or false
Ques. 10Investment (I) in the United States may increase with either an increase in national saving or an increase in net foreign investment.
Indicate whether the statement is true or false
Quick Reply
