A perennial debate is whether federal budget deficits lead to higher interest rates. The follow-ing table gives some historical data on deficits and interest rates. For each year, the deficit is the difference between revenues and expenditures measured in current dollars; a negative figure is a deficit, and a positive figure is a surplus.
On the basis of these data, what inference could you make about the relationship between federal deficits and interest rates? Explain why inferences based on these data alone might be problematic.
Answer to relevant QuestionsIn which of the following markets do you expect efficient outcomes? Why? a. Hurricane insurance for beach houses b. Medical care c. Stock market d. MP3 players e. Loans for students who wish to attend college f. ...Imagine a simple economy with only two people: Augustus and Livia. a. Let the social welfare function be W = UL + UA where U L and U A are the utilities of Livia and Augustus, respectively. Graph the social indifference ...Suppose that Hannah’s utility function is U H = 3 T + 4 C and that Jose’s utility function is U J = 4 T + 3 C , where T is pounds of tea per year and C is pounds of coffee per year. Suppose there are fixed amounts of 28 ...Private military firms provided much of the logistical support to American troops in Afghanistan and Iraq, and some people have advocated using such troops to help stop the genocide being carried out in Darfur, Sudan. ...Denmark recently instituted a “ fat tax,” which charges about $ 3 per kilogram of saturated fat in food. One commentator criticized the tax as inefficient, because it taxes an input to health rather than a health outcome ...
Post your question