What are the two largest categories in federal government spending?
A. national defense and income security
B. Social Security and income security
C. national defense and Medicare
D. Social Security and Medicare
Answer: D
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Which of the following decreases money demand?
A) Bonds become more risky. B) The introduction of online banking. C) Disruptions in the banking system. D) An increase in ATM fees.
Which of the following statements best summarizes the law of diminishing marginal returns?
A) In the short run, as more labor is hired, output diminishes. B) In the short run, as more labor is hired, output increases at a diminishing rate. C) In the short run, the amount of labor a firm will hire diminishes as output increases. D) As more labor is hired, the length of time that defines the short run diminishes.
If a government were to find that it cannot raise taxes any further, and that it cannot borrow any further from financial markets, the government:
A. can increase spending by having the central banks purchase its bonds. B. can decrease the amount of money in circulation. C. cannot increase its spending any further. D. is in default.
If it takes you an hour to make a rational decision and the opportunity cost of that hour is $100, you will:
A. always make rational decisions. B. make rational decisions only if the benefit from doing so is less than $100. C. make rational decisions only if the benefit from doing so exceeds $100. D. never make rational decisions.