econ 2301 msidorya Exam | Questions with 100% Solutions/Verified Answers

Which of the following is true when a budget deficit exists?` - ANSWER Government expenditures exceed tax revenues If the public debt increased by the same amount each year during the past three years, then - ANSWER the U.S. Treasury must have issued securities to fund a flow of government spending that exceeded a flow of tax revenues by the same amount during each of the past three years. Suppose that the federal government had a budget deficit of $60 billion in year 1 and $70 billion in year 2, but that it experiences budget surpluses of $50 billion in year 3 and $10 billion in year 4. Also assume that the government uses any budget surpluses to pay down the public debt. At the end of these four years, the Federal government's public debt would have - ANSWER increased by $60 billion.