Question Details

Economists at the seminar agreed that the U.S. deficit 



1. "One question is whether the government can steel itself to bring its fiscal policy into line with the central bank's monetary policy. Will the government be able to borrow the funds it will need to cover this year's deficit out of the existing money supply, which the Fed is trying to restrict?" If the government tries to borrow more funds than are available there will be a rise in 
a) exports b) inflation c) interest rates d) unemployment 
2. "Fears had been expressed that financing of the federal deficit might squeeze private borrowers out of the market." Private borrowers are squeezed out of the market by 
a) inflation b) higher taxes c) federal regulations d) higher interest rates 
3. "Economists at the seminar agreed that the U.S. deficit of about $180 billion is severely straining domestic capital markets because private-sector capital demand is proving to be exceptionally buoyant." 'Severely straining' means producing 
a) inflation b) higher taxes c) unemployment d) higher interest rates 
4. "In a closed economy, government borrowing "crowds out" household and business investment by pricing them out of available savings, i.e., by ___________. So fiscal stimulus has no net impact on the economy. But in an open economy, excess demand for capital is met from ........" Fill in the blank and complete this clipping. 
a) higher taxes: higher exports b) higher taxes; foreign financing 
c) higher interest rates: higher exports d) higher interest rates; foreign financing 
5. "In general, the Treasury is doing less to "crowd out" private debtors, a phenomenon long considered to be one of the economy's weak points. Savings that would previously have gone into sterile government paper is instead available to ......." 
This is best completed with 
a) pay higher taxes b) finance exports 
c) finance private investment d) increase consumption spending




Economics Assignment Help, Economics Homework help, Economics Study Help, Economics Course Help