If the debt of the federal government increases by $10 billion in one year, the budget:
A. deficit in that year increased by $10 billion.
B. deficit in that year must be $10 billion.
C. surplus in that year must be $10 billion.
D. surplus in that year decreased by $10 billion.
Answer: B
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With normally-sloped IS and LM curves, an increase in government expenditure ________ consumption expenditure since autonomous consumption ________ while induced consumption ________
A) can raise or lower, falls, rises B) can raise or lower, rises, falls C) must decrease, falls, also falls D) must decrease, rises, falls E) must increase, rises, also rises
If there is a leftward shift of the money demand curve, which of the following should the Fed do if it wants to keep output stable?
a. Lower its interest rate target b. Sell bonds in the open market c. Wait, since output usually does not change when the money demand curve shifts d. Raise its interest rate target e. Buy bonds in the open market