If the budget deficit gets smaller than the previous fiscal year's budget deficit, but still remains a deficit, then _____.

A. the national debt is unchanged

B. the national debt increases

C. we experience a budget surplus

D. the national debt decreases

If the MPC were about 0.75 on average, this would imply a government spending multiplier of about 4, according to the simple formula used in introductory courses. However, real world estimates of the spending multiplier in the US are often in the (wide) range of 0.5 to 2.25. What is a frequently cited reason why the measured spending multiplier is lower than what the simple formula would predict?

A. crowding out

B. the Smoot-Hawley Tariff Act

C. deflation

D. stagflation

the money illusion