An increase in government transfer payments of 100

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296.An increase in government transfer payments of $100 billion and a tax cut of $100 billion will have equal effects on the budget balance and unequal effects on real GDP.A)TrueB)False297.Changes in the budget balance may be the result of economic policy, or they may be caused by fluctuations in the economy.A)TrueB)False298.The business cycle and the budget balance are unrelated.A)TrueB)False299.The budget deficit usually decreases when the unemployment rate increases.A)TrueB)FalsePage 54
300.The cyclically balanced budget is an estimate of what the budget balance would be if real GDP were exactly equal to potential output.A)TrueB)False301.The cyclically balanced budget is an estimate of what the budget balance would be during a recessionary gap with real GDP less than potential output.A)TrueB)False302.The cyclically balanced budget deficit doesn't fluctuate as much as the actual budget deficit.A)TrueB)False303.In most years since 1981, the actual budget deficit has been more than 25% of GDP.A)TrueB)False304.Most economists oppose a law requiring the federal budget to be balanced annually.A)TrueB)False305.Most economists believe that the government should balance the budget on average, allowing deficit years when the economy is in recession to be offset by surpluses during years of expansion.A)TrueB)False306.If the government were required to balance the budget during a recession, it would have to decrease taxes and increase government spending.A)TrueB)False307.If the government were required to balance the budget during a recession, it would have to increase taxes and decrease government spending.A)TrueB)FalsePage 55
308.Most economists oppose an annually balanced budget because it would undermine automatic stabilizers.A)TrueB)False309.Canadian provinces, as per federal legislation, must either balance the budget or have a deficit not exceeding 5% of total provincial government spending.A)TrueB)False310.When the Great Recession struck, the Canadian federal government's budget deficit increased from just $160 billion to $2 trillion.A)TrueB)False311.Due to rules requiring states to have balanced budgets, many states experienced a large increase in layoffs once money from the 2009 stimulus ended.A)TrueB)False312.In the United States a large number of states are required to have an annually balanced budget, which worsens the severity of the business cycle.A)TrueB)False

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