Why is functional finance difficult to implement?
1. financing the deficit often has offsetting effects, and the government doesn’t always know how its policies will affect the economy.
2. potential output is not a known quantity, and enacting spending and taxing policies is time consuming.
3. government debt can affect private spending, and taxing and spending can negatively affect other government goals. 4.
it is unknown whether the ricardian equivalence theorem is true.
5. the government cannot function without the popular vote, making policy difficult.

In which of the following games is it clearly the case that the cooperative outcome of the game is good for the two players and bad for society? a. two oil companies own adjacent oil fields over a common pool of oil, and each company decides whether to drill one well or two wells. b. two airlines dominate air travel between city a and city b, and each airline decides whether to charge a "high" airfare or a "low" airfare on flights between those two cities. c. two superpowers decide whether to build new weapons or to disarm. d. in all of the above cases, the cooperative outcome of the game is good for the two players and bad for society