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ch-15 sample questions-word

ch-15 sample questions-word - CH-15 sample questions 1 A...

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CH-15 sample questions 1. A government budget deficit occurs when government revenues exceed government expenditures. True False 2. The portion of the budget deficit or surplus that would exist even if the economy were at potential income is called the passive deficit or surplus. True False 3. The larger the debt and the inflation rate, the less debt will be eliminated by inflation. True False 4. The real deficit is the nominal deficit adjusted for inflation's effect on the debt. True False 5. A cash flow accounting system includes cash inflows and outflows as well as future obligations to the Social Security system. True False 6. In the short-run framework, budget deficits should: A. never be run since they slow economic growth over the long run. B. never be run since they crowd out investment in the short run. C. be run on a temporary basis whenever the economy is below potential output. D. be run on a permanent basis since they can always be financed by printing money. 7. In the long-run framework, deficits reduce _______.
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8. A passive deficit is the portion of the deficit that exists when: 9. If a passive surplus exists, the economy must be: 10. In 2007, the U.S. economy was operating close to potential. The budget deficits experienced by the U.S. in 2007 was: A. primarily passive deficits. B. primarily structural deficits. C. neither structural nor passive deficits. D. about evenly split between structural and passive deficits.
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