When the government runs a deficit it must:
A. buy bonds to finance the deficit.
B. decrease the money supply to finance the deficit.
C. raise taxes immediately.
D. sell bonds to finance the deficit.
Answer: D
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Using the following numbers, what is Macland’s current account?
Goods: exports $500, imports $365 Services: exports $350, imports $400 Income payments: exports $300, imports $425 Unilateral transfers: exports 0, imports $50 a. -$80 b. $2,390 c. -$90 d.-$225
An automobile manufacturing plant opens in Alabama, and its owner, all of the workers, and all raw materials are from Japan. How would the purchase of an automobile from this plant change U.S. GDP and GNP?
a. It would increase GNP and GDP. b. It would increase GNP and leave GDP unchanged. c. It would increase GDP and leave GNP unchanged. d. It would leave both GDP and GNP unchanged.
If a government spends $20 billion on new bridges that have an expected life of 20 years, the expenditures would:
a. Increase government spending and government expenses by the full $20 billion even though a business would expense them over the 20-year period. b. Not change government spending and therefore would not change the government deficit because they are capital expenditures. c. Increase total government spending by the full amount (i.e., $20 billion), but only $1 billion of it would be considered part of the budget deficit because the $20 billion is amortized over the 20 years. d. Initially increase the budget deficit by an amount equal to $20 billion, but only $1 billion of it would be considered part of the government spending because the $20 billion is amortized over the 20 years.
A tariff is a tax imposed on ________ good.
A. a luxury B. an illegal C. a domestic D. an imported