1. Define mandatory spending and discretionary spending .Give examples from the U .5. federal budget 2. 4s. "-4 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. Define on -budget items and off-budget items .Give examples from the U.S. federal budget What are cyclical deficits ? Why are structural deficits more concerning than cyclical decits ? What causes primary deficit to rise? When primary deficit rises , what is likely to happen to the rates on future interest payment and why? What is a bond's 'yield to maturity '? What is the interest rate risk to a bond ? How do a bond's coupon rate and maturity affect its interest rate risk? How does rising national debt impact interest rates . Illustrate the effects using the Loanable Funds Market diagram and the Bonds Market diagram. Why do market interest rates and prices of fixed -rate bonds move in opposite direction? What is the Fed's 'Dual Mandate'? What are three traditional tools the Fed uses to conduct monetary policy? What is the Federal Funds Rate? How does the Federal Reserve influence the Federal Funds Rate using Open Market Operations? How can the Central Bank offset the effects of rising national debt on interest rates using Open Market Operations? Illustrate the effects using the Loanable Funds Market diagram and the Bonds Market diagram. How do increased government budget deficits crowd -out private investment ? Illustrate the effects using the Loanable Funds Market diagram and the Bonds Market diagram What are the potential effects on increasing national debt on long -run economic growth , growth in employment ,and the composition of the labor force ? What will likely happen if the Central Bank monetizes national debt and why ? How do the price elasticity of the supply of Ioanable funds and the price elasticity of the demand for bonds affect the magnitude of the effects of government budget decits on interest rates ? What happens to the supply and {or demand and the value of a country's currency if financial capital is flowing in the country ?What happens when financial capital is flowing out of the country ? How do differences in interest rates and investment risks between countries affect international financial capital flows