Federal deficits, surpluses, national debt

Question 1

3 steps in Federal Budgeting process

Answer 1

1: Budget submission
2:Budget resolution (budget that targets budgetary levels)
3: Budget signed

Question 2

What does G do when they overspend

Answer 2

US Treasury borrows bonds, bills notes

Question 2

What does G do when they overspend

Answer 2

US Treasury borrows bonds, bills notes

Question 3

Who does US Treasury sell to (6)

Answer 3

-Citizens
-Foreigners
-Businesses
-G agencies
-Banks
-Federal Reserve

Question 4

National Debt def + what it does does include

Answer 4

Amount of money G owe to owners of securities
Does not include state and local G debt

Question 5

Debt ceiling def

Answer 5

Maximum amount of debt allowed

Question 5

Debt ceiling def

Answer 5

Maximum amount of debt allowed

Question 6

How does G push back against debt ceiling

Answer 6

Raises its own ceiling by accommodating debt deficit

Question 7

2 causes of national debt

Answer 7

-Recessions
-Increase military expenditures

Question 8

3 problems of National Debt

Answer 8

-Bankruptcy
-Passing on debt to our children
-G borrowing crowds out private sector spending

Question 9

Internal national debt def

Answer 9

G owes debt to its own citizens

Question 10

External national debt def

Answer 10

G owes debt to foreigners

Question 11

Crowding out effect def + cause curve

Answer 11

G competes with private borrowers which rises interest rates so C&I spending decreases and AD curve & real GDP fall

Question 11

Crowding out effect def

Answer 11

Occurs during full employment. G competes with private borrowers which rises interest rates so C&I spending decreases and AD curve & real GDP fall

Question 12

Crowding in effect def

Answer 12

Increase G spending increases C&I spending and AD

Question 13

The crowding-out effect indicates that an increase in a fiscal deficit financed by borrowing will increase interest rates and thereby crowd out some domestic investment spending.

Answer 13

True. The crowding out effect increases interest rates and dampens C&I spending.

Question 14

Most of the US national debt is owed to () thus a rising national debt implies that there will be a future redistribution of income and wealth in favor of ()

Answer 14

other us citizens, bondholders