Explain the reason why the debt-to-GDP ratio in the United States is expected to explode between now and the year 2042
What will be an ideal response?
The debt-to-GDP ratio is expected to explode because government expenditures on transfer programs such as Social Security, Medicare, and Medicaid outpace revenues and are forecast to become more expensive. Expenditures on these programs will increase because the population is aging and health care costs are expected to rise rapidly. Expenditures on Medicaid, Medicare, and Social Security are projected to rise from 10.4% of GDP in 2012 to 18.3% of GDP in 2042. Also, the government has to pay interest on the new debt it issues, so net interest payments are projected to rise dramatically. Interest payments are projected to increase from 1.4% of GDP in 2011 to 11.8% of GDP in 2042.
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If you divide the amount of nominal GDP by the stock of money, you have computed the
a. multiplier. b. price level. c. velocity of circulation. d. inflation rate.
Which of the following is not true about production possibilities frontiers?
A) moving from one point to another on a PPF incurs a tradeoff B) economic growth is shown by shifting the PPF outward C) unemployment of resources is shown by shifting the PPF inward D) a PPF can shift inward or outward
Contractionary fiscal policy actions are likely to result in a ________ in net farm income
Fill in the blank(s) with correct word
In China, many farmers have switched from producing rice to producing vegetables and fruit because they can earn a great deal more money from these specialty crops. Within China, there are some who applaud this change, but others worry that China soon may become dependent on rice imports. Even with the low cost of Chinese labor, does the fact that China is importing rice suggest that other countries now have a comparative advantage in rice production?
A. Yes, but only if there are other countries with even cheaper labor. B. Yes, countries with more expensive labor can offset that cost with abundant land and farm equipment. C. Maybe, because rice is a standardized product, the role of innovation and creativity in its production is important. D. No, China must have a comparative advantage in rice if it imports rice.