What is a budget deficit? What is a budget surplus? Since 1970, has the U.S. government run more budget deficits or budget surpluses?
What will be an ideal response?
A budget deficit is the amount by which annual expenditures exceeds annual receipts. A budget surplus is the amount by which annual revenues exceed annual expenditures. Since 1970, the U.S. government has run a budget deficit in all years but a few in the late 1990s.
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For the following question assume the following facts:
(1 ) Balance of Payments = 0 prior to the transactions. (2 ) Person A (who lives in the United States) purchases an airplane from British Airways for $150,000. (3 ) Person A pays with a check from his account at First Union Bank in the United States. (4 ) British airways, since it will need dollars in 1 month, deposits the check at the Bank of England. (5 ) Bank of England deposits the $150,000 at Commonwealth bank, which is located in the United States. Due to the transactions above, what are the effects on the balance of payments? A) -$150,000 due to import of good (current account debit) B) +$150,000 due to import of good (current account credit) C) -$150,000 due to deposit of Bank of England (capital account debit) D) +$150,000 due to deposit of Bank of England (capital account credit) E) No effect (150,000 current account debit and 150,000 capital account credit)
An improvement in the quality of capital would: a. rotate the per-worker production function upward
b. make the per-worker production function flatter. c. shift the per-worker production function downward. d. rotate the per-worker production function downward. e. have no effect on the per-worker production function.