If the United States Continues to Run Large Structural Deficits

question 42

Multiple Choice

If the United States continues to run large structural deficits year after year, the government will have to

• A) borrow money to finance them.
• B) also run a trade deficit.
• C) raise interest rates to prevent the deflation that accompanies the deficits.
• D) deregulate financial institutions to accommodate the deficits.

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Definitions:

Freddie Mac

A government-sponsored enterprise established to expand the secondary mortgage market by buying loans from lenders, thereby increasing the supply of money available for mortgage lending.

Fannie Mae

A government-sponsored enterprise established in 1938 to expand the secondary mortgage market by securitizing mortgages, thereby increasing the supply of money available for mortgage lending and home ownership.

Culture-War Policy

Public policies or political strategies that emphasize issues related to morality, values, and cultural identity, often resulting in divisive and heated debates within society.

Stem-Cell Research

A branch of biomedical research focused on using undifferentiated cells to develop treatments for diseases and injuries.