Whether or not deficits create a burden depends on how and why the government incurred the deficits in the first place. Explain.
What will be an ideal response?
If the government runs deficits to fight recessions, more investment may be crowded in by rising output than is crowded out by rising interest rates. Deficits contracted to carry on wars certainly impair the future capital stock, although they may not be considered a burden for noneconomic reasons. Because these two cases account for most of the debt the U.S. government contracted until the mid-1980s, that debt cannot reasonably be considered a serious burden. However, some of the deficits since 1984 are more worrisome on this score.
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The total cost of producing a given level of output is
A) maximized when a corner solution exists. B) minimized when the ratio of marginal product to input price is equal for all inputs. C) minimized when the marginal products of all inputs are equal. D) minimized when marginal product multiplied by input price is equal for all inputs.
The Social Security payroll tax tends to be regressive
a. True b. False Indicate whether the statement is true or false