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1. CHAPTER 17<br />Question for Review and Discussion<br />About how much does the federal government spend each year to finance its activities? As a result, does it run a deficit or a surplus?<br />3 trillion, deficit because they spend more than 1 trillion in their activities.<br />What has the U.S. government done so far in response to the issue of global warming, and why does this issue require an international solution?<br />The economic answer to the problem of global warming is to see that the costs of the decision to use carbon-based fuel are taken into account by the decision maker.<br />While spending more money on manufacturing goods is looked upon favorably, why do people feel uneasy about additional spending in health care and education?<br />Because in manufacturing goods people earn money but in education and health they only spend.<br />On what major category do state governments spend the most money per year?<br />Administration & Education<br />What is fiscal policy, and what entity conducts it?<br />Is a policy of using the government budget surplus or deficit to influence the level of spending and income in the economy. <br />What is monetary policy, and what entity conducts it?<br />Is a policy in which the central bank varies the level of money and credit in the economy to affect the level of income<br />What problems is the government likely to face in paying social security benefits in the future?<br />Provide some cushion against the future imbalance between the numbers of people paying in compared to the number of people warming out. <br />What is the Keynesian view?<br />Government can and should play a stabilizing role in the economy.<br />Should the federal government allow an unlicensed lawyer to practice law? Why or why not?<br />What problem will most likely arise when tariffs are imposed?<br />Invest mount decreases, interest role rise the multiplied effect demand on the level of income.<br />What two measures did the U.S. government take to stop the 2008-2009 financial crisis? What effect will they have in the long run?<br />Instituted massive financial bailout of banks and financial institutions, instituted a massive fiscal stimulus package, increasing its spending enormously, while waiting taxes.<br />Will outsourcing ultimately lead to a shift of all U.S. manufacturing to lower-wage countries?<br />Give two examples of how government laws can indirectly influence the distribution of income.<br />The author s rights, licensed lawyers and teachers.<br />What is the law of one price, and what does it mean for the wages of U.S. workers?<br />If a free flow of resources and technology exists equals productive factors will tend to earn equal amount and tradable goods will tend to have the same price.<br />What is the Mickey Mouse protection act? Is it good public policy?<br />Patent and copyright protection is useful because it creates incentives for the development of new technologies and products.<br />