Government-Budget.docx - Question 1. The budget deficit...

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Question 1.The budget deficit will exceed the primary budget deficit in a given fiscal year ifa.the economy is in a recession.b.the rate of inflation exceeds zero.c.net interest payments on outstanding debt are positive.d.government spending exceeds tax revenue.
Question 2.If the government budget is initially balanced and the economy is operating at the full-employment levelof output, a temporary tax cut will most likely
Question 3.During a recession, discretionary fiscal policy is expansionary if
Question 4.Holding the average tax rate on income constant, an increase in the marginal tax rate on income will
Question 5.A tax cut that reduces the marginal tax rate and the average tax rate on income willa.substantially increase labor supply.b.have an ambiguous effect on the labor force participation rate.c.substantially reduce labor supply.d.substantially increase tax revenue.

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Term
Spring
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