I. Answer the following questions about the Federal budget by using the information found at the following website and/or your textbook:

https://www.govinfo.gov/content/pkg/BUDGET-2021-BUD/pdf/BUDGET-2021-BUD.pdf

Proposed Budget of the United States Government, Fiscal Year 2021

A. For each of the following federal departments, find the 2021 estimated spending level:

1. Department of Defense

spending _____________________

1. Department of Justice

spending _____________________

B. Federal government outlays in the U.S. will be about what percent of GDP in 2020? (Hint: Go to the Summary Tables)

C. About what fraction of federal government receipts will come from individual income taxes in 2020?

D. In what year does the proposed 2020 budget project a return to a balanced budget?

II. Answer the following questions about the Public Debt by using the information found at the following website and/or your textbook:

• http://www.treasurydirect.gov/govt/reports/pd/pd.htm The Bureau of the Public Debt

A. What is the size of the public debt? How big was it ten years ago?

B. In fiscal year 2020, how much did the federal government spend to pay the interest on the public debt? What is the opportunity cost of this interest expense?

C. How much would a $100 EE series savings bond issued in January of 1990 be worth today? What interest rate is this bond currently paying? (use the calculator at http://www.treasurydirect.gov/BC/SBCPrice)

D. What is the difference between Treasury bonds, notes, and bills?

III. Which of the following would be examples of fiscal policy?

A. an increase in spending on education _________________

B. a decision by the Fed to lower the federal funds rate __________________

C. a purchase of securities by the Fed __________________

D. a tax cut __________________

IV. Determine the amount by which the following policies would change equilibrium GDP, according to the Income-Expenditure model.

A. taxes are cut by $90 billion, and the mpc = .875

B. $60 billion more is spent on the space program, and the mpc = .8

C. government spending increases by $70 billion, and taxes are raised by the same amount.

D. government spending is cut by $90 billion, and the mpc = .875

V. How would the following policies affect aggregate output and the price level in the short run, according to the aggregate supply and aggregate demand model? Draw a graph to support your answer.

A. a tax cut

B. A decrease in federal spending