The federal budget went $161 billion in fiscal year 2007 to $1 trillion in the next two to three years. What are the main factors that contributed to this increase?
Three main factors contributed to this increase:
The recession of 2007-2009 was the worst since the Great Depression. As such, there was a significant decrease in tax receipts and a significant increase in transfer payments related to automatic stabilizers. Without any discretionary action by the government, this economic downturn would have led to a substantial deficit.
As a result of the sub-prime mortgage issues and the ensuing financial crisis, the federal government responded with the $700 billion Troubled Asset Relief Program (TARP). This spending contributed significantly to the expanding deficit at the end of the 2000s.
In addition, the Bush and Obama administrations both enacted stimulus packages designed to increase or at least limit the decline in aggregate demand. These measures helped the recession from worsening but at the same time significantly increased the budget deficit.
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The economy pictured in the figure has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________. 
A. recessionary; A B. recessionary; C C. recessionary; B D. expansionary; A
A downward shift in the Fed's reaction function is equivalent to:
A. an increase in the Fed's long-term target for inflation. B. a downward shift of short-run aggregate supply C. an upward shift of short-run aggregate supply D. a decline in the Fed's long-term target for inflation.
You put your product on 20% off sale market A but leave it unchanged in market B. Sales in A increase from 840 to 1040 units per week while sales in B rise from 770 to 830 . The Difference-in-difference estimate of the effect of the price change is:
a. 80 units b. 100 units c. 120 units d. 130 units
In the basic competitive model of labor markets, it is assumed that
A. individuals are identical in training and skills but not all jobs are identical. B. not all individuals are identical in training and skills but all jobs are identical. C. individuals are not identical in training and skills and jobs are not identical. D. individuals are identical in training and skills and all jobs are identical.