If raising taxes or borrowing are your only two choices of financing current expenditures, which would you choose, and why, if you were in charge of setting policy?
What will be an ideal response?
Both systems have drawbacks. Increasing taxes might limit economic growth by reducing
consumer spending. Borrowing could cause crowding out by the private sector. The question
can be answered by examining which system will create the most economic good, while
causing the least amount of economic harm. A third alternative is to reduce current
expenditures so that there is no need for deficit financing. This view is normally not very
politically popular.
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What would happen to U.S. economic welfare if the U.S. eliminated tariffs on solar panel imports?
a. U.S. economic welfare would increase because of the social gains from increased U.S. consumption of solar panels. b. U.S. economic welfare would decrease because the social gains from increased U.S. consumption of solar panels would be less than the social costs inflicted on U.S. solar panel producers. c. U.S. economic welfare would decrease because the social gains from increased U.S. production of solar panels would be less than the social costs associated with increased U.S. consumption of solar panels. d. U.S. economic welfare would increase because the social gains from increased U.S. production of solar panels would exceed the social costs associated with increased U.S. consumption of solar panels.
Channeling funds to individuals with productive investment opportunities is the function of ________
A) the financial sector B) state and local governments C) the central bank D) state, local and federal governments