Thank you and please answer all the questions, thank you

1.

One option the government has to restore funding to transfer programs such as Social Security is to raise or eliminate the income cap on Social Security payments. Other things equal, this would result in ________ in the opportunity cost of leisure and cause households to supply ________ labor.

A. a decrease; more

B. an increase; more

C. an increase; less

D. a decrease; less

2.

If the government issues new government bonds to finance a budget deficit, the supply of loanable funds will ________ and the equilibrium amount of investment will ________.

A. increase; decrease

B. increase; increase

C. decrease; increase

D. decrease; decrease

3.

Which of the following is not a policy option for making fiscal policy sustainable?

A. Decreasing expenditure on transfer programs.

B. Increasing seigniorage by increasing the growth rate of the money supply.

C. Decreasing expenditure on government capital goods.

D. Decreasing taxes on labor income.

E. Increasing taxes on capital income.

4.

If the government decreased income taxes by $500 billion and does not pursue a policy change, which of the following would require the private sector to adjust in order to finance the tax decrease?

A. Reduce transfer payments by $500 billion.

B. Reduce expenditures on programs such as education or defense by $500 billion.

C. Issue $500 billion in new Treasury Bonds.

D. Increase other taxes by $500 billion.

5.

Cordelia Saldinia

Debt-to-GDP ratio 172% 65%

Average annual economic growth rate 4.7% 3.2%

Average inflation rate 6.3% 0.3%

Average nominal interest rate 2.5% 4.6%

The above table contains data for the nations of Cordelia and Saldinia for 2012. Assume seigniorage is zero.

Based on the data in the table, the primary budget deficit necessary to make fiscal policy sustainable in Cordelia is ________ of GDP.

A. 1.5%

B. 0%

C. 1.5%

D. 14.6%

6.

The White House's deficit commission has proposed several ways for the government to reduce the federal budget deficit, including freezing salaries of federal workers. Other things equal, freezing salaries of federal workers would tend to ________ the opportunity cost of leisure and ________ the supply of labor.

A.

decrease; decrease

B.

increase; increase

C.

increase; decrease

D.

decrease; increase

7.

Use the following equation to demonstrate how an increase in the budget deficit must increase the trade deficit if neither consumption nor investment changes:

.

If neither consumption nor investment changes, an increase in the budget deficit must increase the trade deficit because in an open economy, an increase in the budget deficit (for example, an increase in the

left-hand side

right-hand side

of the equation) must be balanced by

a decrease

an increase

in the

left-hand side

right-hand side

, and if neither consumption nor investment changes, NX must

decrease

increase

.

What must happen if there is an increase in the budget deficit in a closed economy?

A.

A decrease in saving.

B.

A decrease in investment.

C.

A decrease in net exports.

D.

An increase in net exports.