Discuss the federal budget history of the United States since 1970. Make sure to note specifically the budget position of the United States during the last of the 1990s and compare it to the situation in 2012
What will be an ideal response?
Starting in the early 1970s, the federal budget went into deficit and remained there until 1997. Then from 1997 to 2001, the government had a budget surplus, that changed back to a deficit in 2002. Some of the budget deficits, particularly those in the 1980s and in recent years, were quite large. In the late 1990s the U.S. budget surplus was, at times, large—over $200 billion a year. In 2012, the budget deficit is very large, over $1,200 billion.
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Other things being equal, a rise in a country's terms of trade increases its welfare. What would happen if we relax the ceteris paribus assumption, and allow for the law of demand to operate internationally?
What will be an ideal response?
Which of the following correctly describes the condition that generates the equilibrium levels of price and aggregate output in the economy?
a. When the U.S. budget is balanced b. When aggregate quantity demanded is maximized c. When aggregate supply minus aggregate demand equals the price level d. When aggregate demand equals aggregate supply