Econ Unit 6 Quiz

How do budget deficits contribute to the national debt?

• The national debt is increased by double each budget deficit
• The national debt is increased by each budget deficit
  
• The national debt is reduced by each budget deficit
• The interest rate paid on the national debt is increased by each budget deficit

It is difficult for the federal government to increase or decrease spending because

• Most government  officials are reluctant to authorize any changes in spending
• More than half of all government spending is on titlements
• Taxpayers get upset when the government stops paying for something
• Different states may have different goals and may not agree with the changes

Why do some people want to amend the Constitution to require a balanced budget?

• They believe an amendment would force the government to be careful about spending
• They believe an amendment would make it harder to deal with rapid changes in the economy
• They believe the national debt is not a big problem
• They believe in the power of government spending

Which of the following contributes to the crowding-out effect?

• A federal budget deficit
• Increased federal taxes
• A federal budget surplus
  
• Reduced federal spending
  

What is one of the major problems caused by a large national debt?

• It does not allow small investments by private individuals
• It makes it hard for the government  to carry on activities
• It makes it difficult for the country to operate internationally
• It decreases the amount of money available to be borrowed by businesses.
  

Why do some people want to amend the Constitution to require a balanced budget?

• They believe an amendment would force the government to be careful about spending
  
• They believe an amendment would make it harder to deal with rapid changes in the economy
• They believe the national debt is not a big problem
• They believe in the power of government spending

What is one major argument against a constitutional amendment requiring a balanced budget?

• It would make it hard for the government to respond to rapid changes in the economy
  
• It would force Congress to be more careful about its spending
• It would make it hard for Congress too pass a budget that the President would sign
• It would require Congress to cut popular programs

An example of expansionary fiscal property would be cutting

• Income taxes
• Government spending 
• Production of consumer goods 
• Workers wages

According to Keynesian economics, what can the government do to prevent recessions

• Increaser transfer payments
• Increase taxes
• Increase government spending
• Apply contractionary fiscal policy

Laissez-faire economists will generally recommend against enacting new fiscal policy because

• They believe the economy will self adjust quickly
• They believe the economy will be hard to fix