Which of the following correctly describes the relationship between private-sector spending and the federal budget?
a. A decline in private-sector spending reduces the demand for government services, that reduces fiscal outlays and contributes to a budget surplus.
b. An increase in private-sector spending must be matched by increase in government spending. This increases fiscal outlays and contributes to a budget deficit.
c. A decline in private-sector spending triggers automatic stabilizers that result in a federal budget deficit.
d. An increase in private-sector spending must be matched by increase in government spending. This increases fiscal outlays and contributes to a balanced budget.
c
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Suppose an economy has a balanced federal budget, and a favorable supply shock hits the economy. Tax revenues will ________ and expenditures on transfer payments will ________, resulting in a budget ________
A) fall; fall; deficit B) increase; fall; surplus C) fall; increase; deficit D) increase; increase; surplus
The Federal Reserve System was created by an act of Congress in 1933 in an effort to end a wave of bank failures brought on the Great Depression
a. True b. False Indicate whether the statement is true or false