During 2001-2011, what happened to the federal budget deficit?
What will be an ideal response?
It expanded and real government spending increased rapidly, indicating that fiscal policy was expansionary.
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When neither player in a game would want to deviate from a particular outcome, taking the opponent's behavior as given, the outcome is
a. a Stackelberg equilibrium. b. Pareto optimal. c. a Nash equilibrium. d. a dominant strategy.
Which of the following reforms would reduce the likelihood of a future financial crisis?
a. increased regulations that would make it more difficult for lenders to foreclose on borrowers who are delinquent on mortgage payments b. expansion of government-sponsored lending in order to make loanable funds more readily available to sub-prime borrowers c. institutional changes that would strengthen the property rights of shareholders and provide financial managers with a stronger incentive to pursue long-run objectives d. frequent regulatory changes in order to search for and find the combination that would be most effective
Too much of a good is produced if some external benefits of producing or consuming it are ignored by the private decision makers.
Answer the following statement true (T) or false (F)
The largest expenditure of the U.S. Federal government is for:
A. Education B. National defense C. Pensions and income security D. Interest on public debt