USU Econ 1500 Exam 2 Study Guide
Questions and Answers (Latest 2026)
If the federal government has a budget deficit in a given
year, the U.S. debt will:
A. decrease.
B. remain constant.
C. increase only if output is below potential output.
D. increase. - Correct Answers ✅D. increase.
For fiscal years 2019, 2020, 2021, 2022, and 2023, the
federal budget deficit was approximately _________ (in trillions
dollars).
A. $0.5, $1.0 $1.5, $0.5, $0.8
B. $1.0, $3.1, $2.8, $1.4, $1.7
C. $1.0, $3.3, $2.6 $1.4, $1.7
D. $0.0, $2.0, $4.0, $1.0, $0.5 - Correct Answers ✅C $1.0,
$3.3, $2.6, $1.4, $1.7
When the U.S. Government runs a deficit, the:
A. Fed has to buy bonds to finance the deficit.
B. U.S. Treasury has to sell bonds to finance the deficit.
C. Federal government tax revenues must be less than
Federal government spending.
D. Both B and C are correct. - Correct Answers ✅D. Both B
and C are correct.
,USU Econ 1500 Exam 2 Study Guide
Questions and Answers (Latest 2026)
Keynesian Economics:
A. suggests that deficit spending during a recession is a good
thing.
B. appears to have provided "cover" for politicians to support
deficit spending.
C. is likely a reason the U.S. Federal Government has incurred
a budget deficit is the great majority of the past 40 years.
D. All of the above are correct. - Correct Answers ✅D. All of
the above are correct.
In 2023, when the U.S. economy was at least at potential
output, the actual U.S. government budget deficit was _______
, the cyclical deficit was__________, and the structural deficit
was_________.
A. large; zero; equal to the actual.
B. large; large; large.
C. zero; large; zero.
D. large; equal to the actual; zero. - Correct Answers ✅A.
large; zero; equal to the actual.
Compared to the period prior to 2008, since 2008 U.S.
government budget:
A. surpluses have been larger.
B. deficits have been smaller.
C. deficits have been higher, particularly since 2019.
,USU Econ 1500 Exam 2 Study Guide
Questions and Answers (Latest 2026)
D. surpluses have been larger, particularly since 2019. -
Correct Answers ✅C. deficits have been higher,
particularly since 2019.
U.S. government budget deficits:
A. likely decrease investment.
B. require the U.S. Treasury to sell bonds.
C. likely increase interest rates.
D. All of the above are correct. - Correct Answers ✅D. All of
the above are correct.
U.S. external public debt corresponds to Treasury bonds (i.e.,
government securities) owned by:
A. U.S. citizens.
B. Non U.S. citizens (i.e., foreigners).
C. The Social Security Trust Fund.
D. The Hunter Biden Legal Defense Fund. - Correct Answers
✅B. Non U.S. citizens (i.e., foreigners).
When the U.S. Government pays interest on its external debt,
A. U.S. national income is transferred to foreigners.
B. U.S. national income is only rearranged within the U.S.
C. U.S. national income increases.
, USU Econ 1500 Exam 2 Study Guide
Questions and Answers (Latest 2026)
D. U.S. national wealth rises. - Correct Answers ✅A. U.S.
national income is transferred to foreigners.
When the Federal Reserve buys government securities to
finance deficit spending,
A. it is effectively creating money to finance spending.
B. the money supply falls.
C. the potential cost of this policy is inflation.
D. A and C are both correct. - Correct Answers ✅D. A and C
are both correct.
As of late 2023, the total U.S. government debt:
A. is smaller than U.S. annual GDP.
B. is more than $32.0 trillion.
C. is greater than 120% of GDP.
D. Both B and C are correct but not A. - Correct Answers
✅D. Both B and C are correct but not A.
As of late 2023, federal government interest payments on its
debt:
A. constitute less than 5.0 percent of its revenue.
B. constitute less than 10.0 percent of its revenue.
C. constitute more than 15.0 percent of its revenue.
Questions and Answers (Latest 2026)
If the federal government has a budget deficit in a given
year, the U.S. debt will:
A. decrease.
B. remain constant.
C. increase only if output is below potential output.
D. increase. - Correct Answers ✅D. increase.
For fiscal years 2019, 2020, 2021, 2022, and 2023, the
federal budget deficit was approximately _________ (in trillions
dollars).
A. $0.5, $1.0 $1.5, $0.5, $0.8
B. $1.0, $3.1, $2.8, $1.4, $1.7
C. $1.0, $3.3, $2.6 $1.4, $1.7
D. $0.0, $2.0, $4.0, $1.0, $0.5 - Correct Answers ✅C $1.0,
$3.3, $2.6, $1.4, $1.7
When the U.S. Government runs a deficit, the:
A. Fed has to buy bonds to finance the deficit.
B. U.S. Treasury has to sell bonds to finance the deficit.
C. Federal government tax revenues must be less than
Federal government spending.
D. Both B and C are correct. - Correct Answers ✅D. Both B
and C are correct.
,USU Econ 1500 Exam 2 Study Guide
Questions and Answers (Latest 2026)
Keynesian Economics:
A. suggests that deficit spending during a recession is a good
thing.
B. appears to have provided "cover" for politicians to support
deficit spending.
C. is likely a reason the U.S. Federal Government has incurred
a budget deficit is the great majority of the past 40 years.
D. All of the above are correct. - Correct Answers ✅D. All of
the above are correct.
In 2023, when the U.S. economy was at least at potential
output, the actual U.S. government budget deficit was _______
, the cyclical deficit was__________, and the structural deficit
was_________.
A. large; zero; equal to the actual.
B. large; large; large.
C. zero; large; zero.
D. large; equal to the actual; zero. - Correct Answers ✅A.
large; zero; equal to the actual.
Compared to the period prior to 2008, since 2008 U.S.
government budget:
A. surpluses have been larger.
B. deficits have been smaller.
C. deficits have been higher, particularly since 2019.
,USU Econ 1500 Exam 2 Study Guide
Questions and Answers (Latest 2026)
D. surpluses have been larger, particularly since 2019. -
Correct Answers ✅C. deficits have been higher,
particularly since 2019.
U.S. government budget deficits:
A. likely decrease investment.
B. require the U.S. Treasury to sell bonds.
C. likely increase interest rates.
D. All of the above are correct. - Correct Answers ✅D. All of
the above are correct.
U.S. external public debt corresponds to Treasury bonds (i.e.,
government securities) owned by:
A. U.S. citizens.
B. Non U.S. citizens (i.e., foreigners).
C. The Social Security Trust Fund.
D. The Hunter Biden Legal Defense Fund. - Correct Answers
✅B. Non U.S. citizens (i.e., foreigners).
When the U.S. Government pays interest on its external debt,
A. U.S. national income is transferred to foreigners.
B. U.S. national income is only rearranged within the U.S.
C. U.S. national income increases.
, USU Econ 1500 Exam 2 Study Guide
Questions and Answers (Latest 2026)
D. U.S. national wealth rises. - Correct Answers ✅A. U.S.
national income is transferred to foreigners.
When the Federal Reserve buys government securities to
finance deficit spending,
A. it is effectively creating money to finance spending.
B. the money supply falls.
C. the potential cost of this policy is inflation.
D. A and C are both correct. - Correct Answers ✅D. A and C
are both correct.
As of late 2023, the total U.S. government debt:
A. is smaller than U.S. annual GDP.
B. is more than $32.0 trillion.
C. is greater than 120% of GDP.
D. Both B and C are correct but not A. - Correct Answers
✅D. Both B and C are correct but not A.
As of late 2023, federal government interest payments on its
debt:
A. constitute less than 5.0 percent of its revenue.
B. constitute less than 10.0 percent of its revenue.
C. constitute more than 15.0 percent of its revenue.
