Federal government attempts to eliminate a budget deficit

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Reference no: EM13815481

1. If we passed a constitutional amendment requiring a balanced budget every year, this would probably

a. make our recessions into depressions

b. prevent recessions

c. cause inflation

d. all of the above

2. During the course of a bad recession the fed would probably be doing each of the following, except

a. selling securities on the open market

b. lowering interest rates

c. lowering the reserve requirement

d. lowering the discount rate

3. If, during a depression, the federal government attempts to eliminate a budget deficit, this will

a. cause a demand pull inflation

b. cause cost-push inflation

c. bring about a balanced budget

d. make the depression worse

4. Bank panics were the result of

a. banks holding 100% of their deposits on reserves

b. depositors attempting to withdraw more deposits than the banks held in reserve

c. the US going off the gold standard in 1933

d. money circulating too slowly

Reference no: EM13815481

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