Problem 1. What is the difference between transfer payments and government purchases? How has the mix of transfers and government purchases changed in the federal budget since 1960? List the most important transfer payments in the federal budget. What significant changes have occurred in the mix of all categories of federal government expenditures since 1960?
Problem 2. A prominent senator has calculated the total social benefit of the current amount of space exploration at $3 billion a year. The total social cost of space exploration is currently only $2 billion. The senator argues that a net gain to society would result by increasing the amount of space exploration until the total cost rises enough to equal the total benefits. Is the senator's logic correct? Provide reasons to support your opinion about the efficiency of resource use.
Problem 3. Contrast the various government forms (federal, state, and local), and provide an analysis of their varying sources of revenue, expense structures, and "typical" products provided to the public.