40.The difference between the budget deficit and the national debt is that the deficit is O a. The difference between expenditures and revenues; the debt, the total amount owed by the government. O b. A long-term concept; the debt, a short-term concept. O c. The difference between the size of the debt and the amount of government revenues in a given year. O d. The estimate revenue shortfall; the debt is the actual revenue shortfall. O e. Financed by borrowing; the debt by selling bonds. Question 41 7 p 41.An excess of government revenues over expenditures O a. Causes the national debt to grow larger. O b. Is called a surplus. O c. Has been the norm in the United States economy since 1980. O d. Leads to a decline in national saving. O e. Is most appropriate during a severe recession.39.An increase in the money supply O a. Shifts the aggregate supply curve to the right. O b. Shifts the aggregate supply curve to the left. O c. Shifts the aggregate demand curve to the left. O d. Shifts the aggregate demand curve to the right. O e. Affects neither the aggregate demand nor the aggregate supply curve.36.When the government finances its expenditures by borrowing from consumers and business firms, O a. It is more inflationary than if it borrows from the central bank. O b. It creates new money, making the deficit greater than it would otherwise have been. O c. Interest rates rise, reducing private investment spending. O d. The national debt goes down. O e. It creates a surplus. Question 37 7 37.According to Keynesian model, a decrease in the money supply O a. Shifts the investment function upward. O b. Causes interest rates to fall. O c. Leads to an increase in the GDP. O d. Has no effect on the level of economic activity. O e. Shifts the C + I + G + (EX - IM) line downward.34.The Phillips curve shows the relationship between O a. Output and income. O b. The interest rate and the money supply. O c. The interest rate and the level of investment. O d. Inflation and unemployment O e. Aggregate demand and aggregate supply. Question 35 35.Generally, the ways the federal government can finance its expenditures O a. Require selling the Treasury's gold holdings. O b. Are raising taxes, borrowing and creating new money O c. Require exporting more than we import. O d. All lead to an increase in the national debt. O e. Number only two: raising and lowering taxes.33.Which of the following countries has the least burdensome budget deficit? GDP Government Budget Deficit Country A $ 100 billion $ 2 billion Country B 300 billion $ 35 billion Country C $ 1,000 billion $ 50 billion Country D $ 2,500 billion $ 100 billion Country E $ 4,500 billion $ 250 billion O a. Country A. O b. Country B. O c. Country C. O d. Country D. O e. Country E.32.A major issue leading to demand-side inflation is O a. Rapid growth of an economy's potential output. O b. Results from significant price increases of important resources. O c. The presence of considerable slack in the economy. O d. The existence of unions, and firms with considerable market power O e. Increases in spending when resources are fully employed