Assume that the actual deficit is $150 billion with the economy well below potential output and that the level of economic activity rose to its potential level while tax revenues increased by $50 billion and transfer payments fell by $20 billion

Which statement best describes who benefits from basis strengthening over a hedge with a futures contract?

A. Buyers gain, sellers lose B. Buyers lose, sellers gain C. Both gain D. Neither gains or loses since they have offset their basis risk by hedging

Many economists think that, in the long run, the Phillips curve is

a. a horizontal line. b. a vertical line. c. the same as the short-run curve. d. a 45-degree line from the origin.