Federal Budget and Economics Flashcard

Front

If the federal government has a budget surplus in a given year, the U.S. debt will:

Back

decrease.

Front

For fiscal years 2019, 2020, 2021 and 2024, the federal budget deficit was approximately (in trillions of dollars): $0.5, $1.0 $1.5, $0.5, $1.0, $3.1, $2.8, $4.0, $1.0, $3.1, $2.8 $1.8, $0.0, $2.0, $4.0, $1.0

Back

$1.0, $3.1, $2.8 $1.8

Front

When the U.S. Government runs a deficit, what must happen?

Back

The U.S. Treasury has to sell bonds to finance the deficit.

Front

Keynesian Economics: Suggests that deficit spending during a recession is a good thing. Appears to have provided “cover” for politicians to support deficit spending. Is likely a reason the U.S. Federal Government has incurred a budget deficit is the great majority of the past 40 years.

Back

All of the above are correct.

Front

For 2024, 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_________.

Back

large; zero; equal to the actual.

Front

Compared to the period prior to 2008, since 2008 U.S. government budget

Back

deficits have been higher, particularly since 2019.

Front

U.S. government budget deficits: Likely decrease investment, Require the U.S. Treasury to sell bonds, Likely increase interest rates.

Back

All of the above are correct.

Front

U.S. internal public debt includes Treasury bonds (i.e., government securities) owned by: U.S. citizens, The Federal Reserve, The Social Security Trust Fund, or All of the above?

Back

All of the above.

Front

U.S. external public debt includes Treasury bonds (i.e., government securities) owned by:

Back

Non U.S. citizens and governments (i.e., foreigners).

Front

When the Federal Reserve buys government securities to finance deficit spending,

Back

It is effectively creating money to finance spending and the potential cost of this policy is inflation.