What is the difference between the deficit and the debt?
The budget deficit is the difference over some time period, usually a year, between government receipts and outlays (expenditures plus transfers). When outlays exceed receipts, the budget is in deficit. The national debt is the accumulation of past deficits. The budget deficits in the 1980s and the early 1990s were often over $150 billion a year or more. The national debt at the end of 1998 was about $3.3 billion on a net basis.
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When the Fed sells bonds on a mass scale
A) bonds go to the Fed, and dollars go into the banking system, so the money supply tends to rise. B) bonds go to the Fed, and dollars exit the banking system, so the money supply tends to fall. C) banks have fewer bonds and more dollars, so the money supply tends to rise. D) banks have more bonds and fewer dollars, so the money supply tends to fall.
Assume that foreign capital flows from a nation increase due to political uncertainly and increased risk. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real exchange rate and monetary base in the context of the Three-Sector-Model? Assume the nominal exchange rate is stated as: (Domestic currency per foreign currency). a. The
real exchange rate rises and monetary base rises. b. The real exchange rate falls and monetary base falls. c. The real exchange rate rises and monetary base falls. d. The real exchange rate and monetary base remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.