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Economics U$A: 21st Century Edition

Federal Deficits Quiz

Suppose that the president faces an economy plagued by stagflation. Output is predicted to drop steadily over the next two quarters. Unemployment is at record levels. If there is a deficit, and the president, under these circumstances, endeavors to balance the budget, which of the following will MOST LIKELY result?

A budgetary policy which states that the government’s budget should be set to promote a socially optimal combination of unemployment and inflation is known as:

Suppose that the actual federal budget shows a deficit. But the full-employment budget, by contrast, shows a surplus. As an economic adviser who agrees with the thinking of most 1980s economists, you would MOST LIKELY conclude from this comparison that:

Again using the circumstances in the previous question, as an economic adviser you would probably attribute the deficit shown in the actual budget to:

Following World War II, Americans had a great deal of money to spend for the first time in many years. However, there were few commodities—even necessities—available for purchase. During this period, many economists feel that severe unemployment and even a recurrence of the Depression might have resulted except for the fact that:

True or false: A counter-cyclical policy calls for budget surpluses in bad times to provide a strong reserve, and budget deficits in good times to keep things moving.

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Economics U$A: 21st Century Edition