Government and the Economy

1. Why must Obama convince the public that spending is not a bad thing?

- If the public thinks that spending is a bad thing, then Obama is thinking about approval rating and the 2012 election.

2. What does a trade deficit mean?

- An economic measure of a negative balance of trade in which a country's imports exceeds its exports. A trade deficit represents an outflow of domestic currency to foriegn markets.
3. How does Krugman explain that what is best for corporations is not what is best for America?

-Corporation gets money for "slashing its workforce" but that is horrible for America.
4. Why is it a bad idea for the head of a large corporation like General Electric to advise the government on economic policy?

-GM was saved by tax dollars
5. What are Krugman's positive and negative interpretations of Obama's idea of "competitiveness"?

-At best, it’s a misdiagnosis of our problems. At worst, it could lead to policies based on the false idea that what’s good for corporations is good for America.
6. What is the main lesson we should have learned from the financial crisis according to Krugman?
- we cannot allow a market economy to fix itself.
7. What type of role for the government in the economy would Krugman favor?

-Huge Role