QUIZ: Clinton Wedding and Keynesian Economics

[Kurt_and_Hunter]

1. If, hypothetically, Bill and Hillary Clinton spend $2 million dollars on a wedding for their daughter Chelsea the net effect will be:

A) Transferring money from the wealthy to the less wealthy, or

B) Transferring money from the less wealthy to the wealthy

2. President Obama has invested more than $2 million dollars in low-risk bond mutual funds. (This is a reasonable and prudent thing for an individual to chose to do with $2 million and does not speak poorly of him.) The net effect of this is:

A) Better for the current (depressed) economy than if he had blown the $2 million on an awesome birthday party for Michelle, or

B) Worse for the current (depressed) economy than if he had blown the $2 million on an awesome birthday party for Michelle

3. The reason a (hypothetical) $2 million wedding is controversial while idling $2 million of capital in an investment fund with reduced benefit to the economy is uncontroversial is:

A) We sometimes have a very difficult time getting economics because all of our evolved sensibilities about economics are about FOOD. Our basic sensibilities equate hard times with famine... a shortage of edible plants and animals. In a famine food is a zero-sum game and thus a terrible model for a global crisis of confidence in abstract investment instruments. Unlike food being eaten, money does not go away when a rich person spends it. It is transferred to someone else to make use of... the same as when any of us spend money. Our natural response to tough economic times (thrift) is a large part of what makes a recession turn into a depression. And that is why the government, as spender of last resort, has to be extravagant in tough times. (And that is why our deficit is part of the solution, not part of the problem, and why a Republican takeover of Congress will all but guarantee a return to recession.)

B) Because spending money is visible and reminds folks that some people have money while quietly depositing money in an account is not particularly telegenic

C) A & B

Answer Key: 1-B, 2-B, 3-C (A is also okay)

[meowomon]

1. I passed!

Well, I got two out of three.

[Renew Deal]

2. lol

:rofl: :yourock:

[hedgehog]

3. 'course, the better way to handle the economy is to prevent

such an accumulation of wealth to the few that a government stimulus is needed in the first place.
However, that is a discussion for another day with less focus on specific persons.

Best wishes to the happy couple on their wedding day. May the weather be fine and the marriage long and happy!

[BootinUp]

4. For some reason I come up with a dif answer on 1, but

I think I understand your point and agree with it.

[uncommon]

5. Why is the answer to 1 - B?