How serious is the national debt to our economic stability?
The debt is a significant issue but not as troubling as some in the media make it out to be. The debt is owed to the citizens of the United States and it is the obligation of the government to them. Contrary to public hype, typically foreigners own 30 percent. The real problem with government engaged in deficit spending, which builds debt, is the upward pressure on interest rates and the crowding out of consumer and business borrowing.
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Suppose the government spends the same for a particular consumer under two different policies: One subsidizes the price of good x while the other is a lump sum subsidy. Which of the following is true.
A. Compared to the lump sum subsidy, the consumer will purchase more x under the price subsidy if and only if x is a normal good. B. Compared to the lump sum subsidy, the consumer will purchase less of x under the price subsidy if x is an inferior good. C. Compared to the lump sum subsidy, the consumer will purchase less of x under the price subsidy if x is a Giffen good. D. The consumer will spend the same on x under the two policy if and only if her indifference curves are kinked. E. Both (a) and (c). F. Both (b) and (c). G. All of the above. H. None of the above.
Many financial analysts use GDP as a measure of the economy's performance. However, GDP has several shortcomings in terms of measuring economic well-being
State at least three such shortcomings and explain how each affects the validity of GDP as a measure of economic well-being.
If the shoplifter knows that the security guard has a reputation of always being vigilant, what is his best response?
a. Steal b. Not steal c. Run d. Hide
In order to explain the changing gap in earnings between skilled and unskilled workers in recent years, economists have proposed two hypotheses. One hypothesis emphasizes
a. compensating differentials. b. the increased recognition that a larger stock of human capital usually leads to higher earnings. c. technological progress. d. the decreasing importance of international trade.