a balanced budget occurs when the national debt is reduced to zero course hero

Is a budget deficit inevitable when tax rates are cut?

Then, tax rates are cut and government purchases are increased. Is a budget deficit inevitable? a. No, because a cut in tax rates (on the upward-sloping portion of the Laffer curve) increases tax revenues, and if the increase in tax revenues equals the increase in government purchases there is no deficit. b.

How much should the government spend to bring the economy into equilibrium?

There is no crowding out and government has correctly estimated that to bring the economy into long-run equilibrium it should raise government purchases by $123 billion. If government purchases are raised by $123 billion, does it follow that the economy will be moved into long-run equilibrium?

How do policymakers decide to deal with the current economic slowdown?

a. Policymakers believe an economic downturn has occurred, but they decide not to take action until they are sure. b. Policymakers are in the process of proposing policy measures to deal with the current economic slowdown.

What does "less than the market-clearing wage" mean?

Who are the economists who are discussing the current high unemployment rate?

Is C greater than what firms plan to invest?

Does a cut in taxes increase the deficit?

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What does "less than the market-clearing wage" mean?

d. less than the market-clearing wage to minimize labor cost per unit of production.

Who are the economists who are discussing the current high unemployment rate?

Two economists, Smith and Jones, are discussing the currently high unemployment rate. Smith says that something ought to be done quickly because the economy may not be able to restore itself to full employment. Jones says that it is better to take a "hands-off" approach.

Is C greater than what firms plan to invest?

c. is always greater than what firms plan to invest.

Does a cut in taxes increase the deficit?

a. No, because a cut in tax rates (on the upward-sloping portion of the Laffer curve) increases tax revenues, and if the increase in tax revenues equals the increase in government purchases there is no deficit. b. Yes, because a cut in tax rates (on the upward-sloping portion of the Laffer curve) lowers tax revenues.

What do Keynesians believe?

a. Keynesians believe the economy sometimes gets stuck in a recessionary gap and can't get itself out without government intervention.

What causes a decrease in investment spending?

A deficit causes an increase in interest rates, which causes a decrease in investment spending.

What is the national debt reduced to?

a. the national debt is reduced to zero dollars.

When do you get unemployment if you lose your job?

the unemployed automatically become eligible for unemployment benefits when they lose their jobs in a recession.

When Congress and the President cannot agree on expenditures, will the d. always result?

d. will always result when Congress and the president cannot agree on expenditures.

What does "less than the market-clearing wage" mean?

d. less than the market-clearing wage to minimize labor cost per unit of production.

Who are the economists who are discussing the current high unemployment rate?

Two economists, Smith and Jones, are discussing the currently high unemployment rate. Smith says that something ought to be done quickly because the economy may not be able to restore itself to full employment. Jones says that it is better to take a "hands-off" approach.

Is C greater than what firms plan to invest?

c. is always greater than what firms plan to invest.

Does a cut in taxes increase the deficit?

a. No, because a cut in tax rates (on the upward-sloping portion of the Laffer curve) increases tax revenues, and if the increase in tax revenues equals the increase in government purchases there is no deficit. b. Yes, because a cut in tax rates (on the upward-sloping portion of the Laffer curve) lowers tax revenues.