Briefly explain the purpose of budget deficits.
What will be an ideal response?
Budget deficits can be important because they provide the federal government with the flexibility to respond appropriately to changing economic circumstances. For example, the government may run deficits during special emergencies such as military involvements, earthquakes, fires, or floods. The government may also use a budget deficit to avert an economic downturn.
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What is the meaning of “a defective telescopic faculty,” as described by A. C. Pigou?
A. Persons are unable to plan rationally for consumption. B. Persons zero in on something and cannot consider alternatives. C. Persons seek long-term goals and ignore present problems. D. Persons are unable to give adequate weight to the future.
Which of the following ismostlikely to increase the supply of corn?
A. The farm worker's union successfully negotiates a pay increase for corn harvest workers. B. The Surgeon General announces that eating corn bread contributes to baldness in men. C. Congress and the President eliminate subsidies formerly paid to corn farmers. D. Farmers that grow soybeans can also grow corn, and the price of soybeans drops by 75 percent.
The WTO and GATT promote trade by:
A. reducing tariffs. B. eliminating quotas. C. reducing agricultural subsidies. D. All of these.
An example of a transfer payment is
A) a teacher's paycheck. B) a paycheck for a member of the National Guard. C) a welfare payment. D) a purchase of a new bridge in Alaska.