11. Using the figures below, calculate the federal budget deficit. Discretionary

Question

11. Using the figures below, calculate the federal budget deficit. Discretionary spending = 600 Spending on entitlements 1,250 Tax receipts = 2.000 Interest on the debt = 250 A. -150 B. 100 C. 400 D. 2,100 E. None of the above 12. Appropriated funds are not immediately spent. Even when spent, the multiplier process takes time to work. What type of lag is this? A. Administrative lag Operational lag C. Outside lag D. Recognition lag 13. Which type of lag affects automatic stabilizers? A. Administrative lag B. Operational lag C. Outside lag D. Recognition lag E. None of the lags affect automatic stabilizers 14. Which of the following is NOT an implication of the idea that wages are sticky downward? A. In a recession, wage rates stay the same or fall only a little B. The economy can remain stuck in a recessionary equilibrium C. Aggregate demand can't shift to the left D. Aggregate supply won't shift down enough to restore equilibrium at potential GDP E. All of the above are implications of wages being sticky downward 15. What happens to planned investment when disposable income increases? A. Planned investment decreases B. Planned investment increases C. Planned investment is not affected by changes in disposable income D. It is impossible to predict E. It depends upon where we are in the business cycle 16. Private investment gets "crowded out" when the government runs a deficit, because: A. Higher business taxes deplete investment capital B. Government borrowing raises the real interest rate C. The Federal Reserve reduces the money supply D. Ricardian equivalence E. The deficit reduces aggregate demand

Explanation / Answer

Budget deficit= Expenditure - Tax Revenue

=( 600+1250+250 ) - 2000

= 100

right answer is (B)

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