7:04 7)Which of the following is true of an annually balanced federal budget? Most economists agree that the federal government should balance its budget just as each household does. Such a policy would require the government to increase its spending when tax receipts decrease. LTE Such a policy became popular between the 1930s and 1960s. Such a policy guarantees that an economy is its potential level. Such a policy could worsen a contractionary gap. 13) Deficits that arise from discretionary fiscal policy lead to a(n): increase in the demand for money, which is offset by the sale of more government securities. decrease in the demand for money, which is offset by the sale of more government securities and an increase in interest rates. increases in the number of government securities sold to the public and higher interest rates. decreases in the number of government securities sold to the public and an increase in interest rates. increases in the public's demand for money and a decrease in the number of government securities sold to the public, leading to lower interest rates. 7:04 LTE 15) Which of the following components of aggregate expenditure is most subject to crowding out? Consumption expenditures Investment spending Imports Government purchases of goods and services National saving 16) Increased government borrowing to cover a budget deficit results in: a higher interest rate and the depreciation of the U.S. dollar. a higher interest rate and the appreciation of the U.S. dollar. a lower interest rate and the depreciation of the U.S. dollar. a lower interest rate and the appreciation of the U.S. dollar. increased purchases of foreign assets by U.S. residents. 17) The federal budget experienced surpluses from 1998 to 2001 2002 to 2006 1970 to 1973 1991 to 1994 1985 to 1988 18) The budget deficit increased during the Great Recession of 2007-2009 and the financial crisis of 2008 increased the budget deficit because of: an increase in the tax rates for high-income households. a sudden increase in terrorist attacks and anthrax scares in the economy. low interest rates that crowded out private investment. discretionary tax cuts and greater outlays on unemployment benefits. greater outlays on national defense spending.