e) recognition lag. 25. Interest payments on the national debt a) do not add to
ID: 1123873 • Letter: E
Question
e) recognition lag. 25. Interest payments on the national debt a) do not add to the current budget deficit. b) cannot affect future debt. c) have increased with each budget deficit. d) have decreased since 1960. e) have remained constant since WWIL 26. Monetarists attribute most GDP fluctuations to: a) unstable investment spending. b) unstable consumption spending. c) unstable money demand. d) unstable money supply e) rational expectations on the part of individuals. 27. The relationship between the interest rate and the quantity of money demanded is a direct relationship b) a) is an inverse relationship c) is nonexistent d) is a direct relationship when the interest rate is low and an inverse relationshin when the interest rate is high e) is an inverse relationship when the interest rate is low and a direct relationshi when the interest rate is high 28. The budget of the United States Government is submitted by the: a) President to the Congress with proposals for government expenditure. b) Congress to the President with proposals for government expenditure. c) President to Congress with proposals for taxes. d) Congress to the President with proposals for taxes. e) President to the Congress with proposals for expenditure and taxes. 29. A continuing resolution a) shuts down government agencies in the absence of an approved budget. b) allows agencies to spend at the rate less than requested in the absence of an approved budget. c) enables Congress to override the President's budget. d) contributes to the efficiency of the federal budget process. e) is used only infrequentlyExplanation / Answer
(25) (c)
As budget deficit rises, government finances the deficit by borrowing more and more, so interest payment continues to rise.
(26) (d)
Monetarists attribute the changes in output and GDP on the change in money supply.
(27) (b)
Demand for money curve is downward sloping, reflecting an inverse relationship.
(28) (e)
The US budget process starts with the President submitting the detailed budget on tax and expenditures to the Congress for approval.
(29) (b)
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