1. The budget deficit or surplus is the difference between what a government ____ and what it ____ in a year. A. pays for imports; spends on exports. B. collects in taxes; spends C. earns from transfers; pays in transfers D. spends on programs; gives away in foreign aid.

Question 2 (2 points) During a recession, unemployment _____, tax revenue ____, and the budget deficit ____. A. rises; falls; rises. B. rises; rises; falls. C. falls; rises; rises. D. falls; falls; rises.

Question 3 (2 points) In 2021, Auggieland collected $375,000 in taxes and spent $450,000. In 2021, the country of Auggieland A. Budget surplus of $75,000 B. Budget deficit of $75,000 C. Budget deficit of $125,000 D. Budget surplus of $825,000

Question 4 (2 points) Crowding out occurs when A. increases in government spending become ineffective because tax revenues increase as income increases B. government borrowing to finance its spending decreases private sector investment C. monetary policy actions decrease the effectiveness of fiscal policy D. restrictive monetary policy actions causes interest rates to increase

Question 5 (2 points) If the economy's full-employment output is $14 trillion, actual output is $13 trillion, and the budget deficit is $1 trillion, the deficit in this case is known as a: A. natural employment deficit. B. cyclical deficit. C. structural deficit. D. debt deficit.