Deficit & Debt

Front

Which of the following is NOT a primary tool for the government's discretionary fiscal policy?
government spending,
taxation changes

Back

open market operations

Front

The government utilizes a contractionary fiscal policy to

Back

deal with inflationary pressures

Front

To implement an expansionary fiscal policy the government will

Back

decrease taxes and increase spending

Front

Expansionary fiscal policies lead to ___________________ spending.

Back

deficit

Front

The government borrows money to cover any deficits it runs by

Back

issuing bonds

Front

A deficit is

Back

when the government spends more than it collects in taxes and borrows to cover the difference.

Front

The government can use a _________________ to reduce its debt.

Back

surplus

Front

The effect of government borrowing can be modeled using the loanable funds market. A government budget deficit results in a(n) ____________________________ for loanable funds.

Back

increase demand

Front

The effect of government borrowing can be modeled using the loanable funds market. A government budget surplus results in a(n) ____________________________ for loanable funds.

Back

increase supply

Front

What happens to interest rates when the government enacts an expansionary fiscal policy?

Back

real interest rates rise