Suppose that you are an economist working for the United States government and are asked to defend the level and growth of government spending. What information could you use to your advantage?
You could begin by noting that, while government spending has risen, government spending in the United
States as a percentage of GDP has remained relatively constant since 1970 . Second, you could point out
that the percentage of GDP devoted to government spending in the United States is comparable to that of
other OECD countries and this has been the case for at least thirty years. Finally, you could argue that
without government purchase of public goods, such as roads and defense, they would not be produced at
all.
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The Mint Act of 1792 failed to provide for a stable domestic hard currency for the U.S. because
(a) the supply of gold and silver was inadequate. (b) the federal government failed to make the coins legal tender. (c) gold was undervalued, while silver was exported. (d) the notes of the U.S. government were not accepted by the population because of their low value, while the government had no gold to offer.
Which of the following is true about the combination of televisions and smartphones represented by point F in Figure 1.4?
A. Point F is unattainable even with advances in technology. B. Point F will be more easily attainable if the government takes control of all privately run factories. C. Point F is inefficient now. D. Point F can possibly be reached if more economic resources become available or technology improves.