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1. Forecasts by the Congressional Budget Office show spending on Social Security

ID: 1210277 • Letter: 1

Question

1.     Forecasts by the Congressional Budget Office show spending on Social Security, Medicare, and Medicaid rising from 9.9 percent of GDP in 2013 to ________ percent of GDP in 2087, and by 2087 the federal government will be spending, as a fraction of GDP, ________ on these three programs as it currently spends on all its programs.

12.3 percent; more

12.3 percent; half as much

23.4 percent; more

23.4 percent; half as much

1.     Which of the following is not an advantage to a country of choosing to fix its exchange rate against a major currency, rather than choosing a floating exchange rate?

A- Pegging allows the country more flexibility in conducting monetary policy.

B-Pegging helps avoid inflation in imported goods caused by currency depreciation for countries with significant levels of imports.

C- Pegging insures that interest payments stemming from foreign loans do not fluctuate with the value of the currency.

D- Pegging reduces the uncertainty caused by currency fluctuations and thereby simplifies business planning.

1.     The increase in government spending on unemployment insurance payments to workers who lose their jobs during a recession and the decrease in government spending on unemployment insurance payments to workers during an expansion is an example of

automatic stabilizers.

discretionary fiscal policy.

discretionary monetary policy.

automatic monetary policy.

12.3 percent; more

12.3 percent; half as much

23.4 percent; more

23.4 percent; half as much

1.     Which of the following is not an advantage to a country of choosing to fix its exchange rate against a major currency, rather than choosing a floating exchange rate?

A- Pegging allows the country more flexibility in conducting monetary policy.

B-Pegging helps avoid inflation in imported goods caused by currency depreciation for countries with significant levels of imports.

C- Pegging insures that interest payments stemming from foreign loans do not fluctuate with the value of the currency.

D- Pegging reduces the uncertainty caused by currency fluctuations and thereby simplifies business planning.

1.     The increase in government spending on unemployment insurance payments to workers who lose their jobs during a recession and the decrease in government spending on unemployment insurance payments to workers during an expansion is an example of

automatic stabilizers.

discretionary fiscal policy.

discretionary monetary policy.

automatic monetary policy.

Explanation / Answer

1. 12.3 and they need to be spend more than the GDP rate

2.1. c

3.1. B, it comes under fiscal policy only