What fiscal policy actions did the U.S. government take in 2008 and 2009?
What will be an ideal response?
In 2008, the U.S. Congress passed an economic stimulus measure to increase government spending. The $150 billion in spending came in the form of tax breaks for businesses and payments to individuals. This initial stimulus did not have much effect because households saved a substantial portion of their government payments. In 2009 a significantly larger spending stimulus measure, called the American Recovery and Reinvestment Act of 2009 was passed. This $787 billion measure was used for tax rebates for low- and middle-income taxpayers plus expenditures on infrastructure, health care, and education. These expenditures were in addition to $700 billion spent to aid financial institutions.
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Angela reads financial advice columns and concludes the following. Which, if any, of her conclusions are incorrect?
a. Higher average returns come at the price of higher risk. b. People who are risk averse should never hold stock. c. Diversification cannot eliminate all of the risk in stock portfolio. d. None of her conclusions are incorrect.
Banks act as:
A. an organizer among firms in a specific market. B. a negotiator for buyers. C. intermediaries between borrowers and savers. D. informants to various buyers about prices and contracts.