Question

1. Economists believe that an increase in equilibrium income can eliminate a passive deficit but cannot eliminate a structural deficit. [True or False]

2. The real deficit is the nominal deficit adjusted for inflation's effect on the debt. [True or False] 

3. The larger the debt and the inflation rate, the less debt will be eliminated by inflation. [True or False]

4. The U.S. has a trade deficit when the value of goods and services we import exceeds the value of goods and services we export. [True or False]

Answer 1

1.False;Economists believe that an increase in equilibrium income can eliminate a cyclical deficit but cannot eliminate a structural deficit.

2.True;The real deficit is the nominal deficit adjusted for inflation's effect on the debt

3.False;Larger inflation rate reduces the value of the dollars that is used by the government to pay back the debt, so more debt will be eliminated.

4.True;The U.S. has a trade deficit when the value of goods and services we import exceeds the value of goods and services we export

answered by: anonymous