Purchasing insurance removes risk
a. true
b. false
b. false
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Economists believe that public debt
a. cannot create inflation b. can create inflation if the government sells bonds to private citizens c. can create inflation if the government sells bonds to private firms d. can create inflation if the government sells bonds to the Federal Reserve e. can create inflation if the government sells bonds to foreigners
Historically, the government has used fiscal policy to affect the economy through
a. central planning. b. indicative planning. c. aggregate demand. d. aggregate supply.
Consider the following problems: overcrowded public highways, overfishing in the ocean, polluted air, and the near-extinction of the wild rhinoceros. What do these problems have in common?
a. Private markets could easily solve them if governments left the markets alone. b. They would all go away if the government sponsored an intensive public-information campaign. c. They are all the result of a failure to establish clear property rights over something of value. d. They are all the result of a failure of corrective taxes.
Answer the next question using the following budget information for a hypothetical economy. Assume that all budget surpluses are used to pay down the public debt. Government SpendingTax RevenuesGDPYear 1$450$425$2,000Year 25004503,000Year 36005004,000Year 46406205,000Year 56805804,800Year 66006205,000A budget surplus occurred in
A. Year 2. B. Year 3. C. Year 4. D. Year 6.