Quiz 12 1. The burden of the debt is passed on to future generations when the debt is held by: Foreign households B. households C. corporation D….

Quiz 121.The burden of the debt is passed on to future generations when the debt is held by:A.Foreign householdsB.U.S. householdsC.U.S. corporationD.State and local governments2.If deficit spending does not contribute to public investment and crowds out private investment, then: A.The rate of economic growth will decline, ceteris paribus.B.Future generations will bear some of the debt burdenC.Future productive capacity will be diminishedD.All of the above3.President Hoover’s prescription in 1932 was for cutbacks in government spending and higher taxes. He was effectively:A.Targeting the goal of full employment rather than reduction of inflationB.Increasing the AD shortfallC.Applying the Keynesian prescription for handling depressionsD.All of the above4.When the economy is fully employed, the sale of more government bonds to finance greater government debt:A.Pushes the economy along its production-possibilities curve toward more public-sector goodsB.Results in crowding outC.Means the government is running a deficitD.All of the above5.An increase in unemployment, ceteris paribus:A.Leads to increased government expenditures.B.Leads to reduced government revenuesC.Increases the budget deficit or reduces the budget surplusD.All of the above6.Which of the following is an argument against balancing the federal budget?A.The federal government spends and interferes with the economy too muchB.The government may not be able to pay off its debtsC.The government may be unable to pull the economy out of recession if it does so.D.An equivalent increase in government spending and taxes has no effect on income.7.When there is excess aggregate demand, it is appropriate for the government to:A.Make budget surpluses smallerB.Make budget deficits smallerC.Make budget deficits largerD.Increase the public debt8.Which of the following would be most likely to increase the federal budget deficit?A.Higher inflation and higher unemployment ratesB.A higher inflation rate and a lower unemployment rateC.A lower inflation rate and a higher unemployment rateD.Lower inflation and lower unemployment rates9.Which of the following is a measure of the burden of continual deficit financing over time?A.The ratio of the deficit to the GDPB.The ratio of the nominal debt to the nominal GDPC.The ratio of the nominal deficit to the nominal debtD.The ratio to tax revenues to the debt10.With greater deficit spending:A.The U.S. Treasury buys bondsB.The consumption function shifts downwardC.The aggregate supply curve shifts to the rightD.The aggregate demand curve shifts to the right

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