For some of the questions the options for the answer are in red. One is to be selected for each blank.

Screen Shot 2021-04-16 at 4.31.... O A Screen Shot 2021-04-16 at 4.31.... A Q Search Edited Edited Ev Aa Ev Aa The following graph shows the relationship between GDP and the budget deficit or surplus. 3. Test Yourself Q3 If the Federal Reserve raises interest rates, what is the likely effect on tax receipts, interest expenses, and the budget deficit? (?) Tax receipts will decrease, interest expenses will decrease, and the budget deficit will be reduced. Tax receipts will decrease, interest expenses will decrease, and the budget deficit will increase. Taxes - Transfers Tax receipts will increase, interest expenses will decrease, and the budget deficit will be reduced. Tax receipts will decrease, interest expenses will increase, and the budget deficit will increase. (Cutting/Raising ) (Rasing / Reducing) The government can offset the effects of the Federal Reserve increasing interest rates by either taxes or government (Not change / Decrease / Increase) spending. The budget deficit will as a result of this fiscal policy choice. Government Spending Spending and Tax Receipts 1. Test Yourself Q1 Which of the following statements best explain the difference between the budget deficit and the national debt? Check all that apply. A national debt occurs when the government's expenditures exceed its receipts during a period of time. The national debt is the federal government's total amount of debt at a moment in time. Y1 Gross Domestic Product A budget deficit occurs when the government's expenditures fall short of its receipts during a period of time. A budget deficit occurs when the government's expenditures exceed its receipts during a period of time. O The budget deficit is the federal government's total amount of debt at a moment in time. Identify the effect on the national debt if the federal government budget is in surplus or deficit for the current year. Suppose the level of full employment in the economy is expected to be at Y1 , whereas the actual level of GDP is at Y2 . Budget Surplus or Deficit National Debt Increases National Debt Decreases Budget surplus O O (Balanced Budget, Budget Deficit, Budget Surplus) (Balanced Budget, Budget Deficit, Budget Surplus) The structural budget would predict a , whereas the actual budget would show a Budget deficit O O