Understanding Government Budgets and Economic Policies

The video explores the debate on whether the U.S. federal government should balance its budget like a household. It explains fiscal policy, the difference between deficit and debt, and the role of the Federal Reserve. The video discusses Keynesian economics and stimulus measures, contrasting them with austerity approaches. It concludes with reflections on economic strategies and viewer interactions.

What is the primary source of revenue for the government?

• Loans from foreign countries

• Taxes

• Sales of government assets

• Donations from citizens

What is the difference between a deficit and debt?

• Deficit is the total money owed, debt is the yearly shortfall

• Deficit is the money borrowed from foreign countries, debt is the money borrowed from citizens

• Deficit is the yearly shortfall, debt is the total money owed

• Deficit is the money spent on military, debt is the money spent on social programs

Why might the government choose to borrow money instead of raising taxes?

• Raising taxes increases economic activity

• Borrowing does not affect the national debt

• Borrowing is more popular among voters

• Raising taxes is easier than borrowing

What role does the Federal Reserve play in economic policy?

• It drafts the federal budget

• It sets tax rates

• It manages the supply of currency

• It controls fiscal policy

What is the multiplier effect in economic stimulus?

• The increase in government debt due to borrowing

• The reduction in taxes to boost spending

• The increase in economic activity from government spending

• The decrease in unemployment due to austerity measures

What is the main goal of austerity measures?

• To stimulate economic growth

• To balance the budget by reducing deficits

• To lower interest rates

• To increase government spending

What was a common outcome for countries that embraced austerity?

• Stifled economic activity and increased unemployment

• Increased tax revenue

• Decreased unemployment

• Increased economic activity

What is a key criticism of economic stimulus measures?

• They often lead to high inflation

• They may not go far enough to address economic issues

• They always result in higher taxes

• They decrease investor confidence

According to the video, when should a government focus on paying off its debts?

• During economic recessions

• When unemployment is low

• When the economy is strong

• When inflation is high

What did Keynes mean by 'In the long run, we're all dead'?

• Debt should be repaid as soon as possible

• We should focus on long-term economic stability

• Immediate economic relief is more important than distant threats

• Economic policies should prioritize future generations