If the federal government was required to balance its budget, when would government spending most likely...

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Question

If the federal government was required to balance its budget, when would government spending most likely...

If the federal government was required to balance its budget, when would government spending most likely decrease?

Select one:

a. When employment was rising rapidly for an extended period of time

b. When unemployment was declining for an extended period of time

c. When the economy was experiencing a strong expansion due to high business confidence

d. When the economy was experiencing a demand pulled inflation

e. A balance budget amendments ensures that government spending never decrease

Suppose that the Price level = 140, Real GDP = $15 billion and Velocity of Money = 21. What does the supply of money equal?

Select one:

a. $200 billion

b. $180 billion

c. $150 billion

d. $120 billion

e. $100 billion

business economics

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Answer 1

Answer #1

1)

Answer: (A)

High employments means now the government needs to spend less to balance the budget. Thus, the decrease in spending would create a balanced budget.

2)

MV = PY

21*M =15*140

M =2100/21

=100

Answer: (E)

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Answer 2

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