# 30 the government budget constraint tells us that the

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Chapter 14 / Exercise 14-27
Intermediate Accounting: Reporting and Analysis
Jones/Wahlen
Expert Verified
______ 30)The government budget constraint tells us that the budget deficit is equal to: A)the primary deficit plus interest on the debt.B)the primary deficit.C)imports minus exports.D)the primary deficit plus the trade deficit plus interest on the debt.E)interest on the debt.
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Chapter 14 / Exercise 14-27
Intermediate Accounting: Reporting and Analysis
Jones/Wahlen
Expert Verified
Economics 110BProf. Genevieve PetersFall 2007 Sample Final Exam7 ______ 31)The official measure of the deficit: ______ 32)All else equal, a rise in the debt-to-GDP ratio implies: ______ 33)If the Ricardian equivalence proposition is correct, then: ______ 34)"Debt repudiation" occurs when: A)a central bank will no longer monetize the debt.B)a government announces it will no longer run real deficits.C)a government announces it will no longer run nominal deficits.D)a government announces it will no longer honor its debt obligations.______ 35)The primary deficit is represented by which of the following?A)TGB)TGrBC)TGiBD)TGiBE)TG rB
Economics 110BProf. Genevieve PetersFall 2007 Sample Final Exam8Analytical Problems (35 points total) 1a. Suppose that a government has a positive debt in yeart. To keep this debt from increasingover time, what must happen to the primary deficit? Explain. (2 points)1b.Suppose that a government has a positive debt in yeart. To keep this debt from increasingover time, what must happen to the inflation-adjusted deficit. Explain. (2 points)
Economics 110BProf. Genevieve PetersFall 2007 Sample Final Exam92.Assume that individuals consider only the short-run effects of changes in expected futuremacroeconomic variables. Suppose that government spending is expected to increase in thefuture and that the Fed is expected to change the money supply to leave future outputunchanged.2a.Briefly discuss what effect this increase in future government spending and Fed response willhave on the expected future real interest rate and expected future output. (2 points) 2b. What effect will this expected combination of policies have on current output, currentinterest rates, current consumption, and current investment? Explain. (4 points)
3. For each of the following events, assume that the goods market is initially in equilibrium andthat trade is balanced at the initial level of output. Explain what effect each event will have