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Which of the three conditions just described-low inflation, high inflation, or deflation- best characterizes the U.S. economy right now?
What are some of the advantages and disadvantages of discretionary fiscal policy? Give some examples of the use of discretionary fiscal policy.
What is meant by an automatic stabilizer? Give some examples of economic institutions that function as automatic stabilizers.
How is the federal budget surplus or deficit defined? How has the federal budget position varied in recent years?
What is the impact of a lump-sum change in taxes on aggregate demand and economic equilibrium? How does it differ from a change in government spending?
Why doesn't the government run surpluses every year instead of deficits? Wouldn't doing so be better for the economy?
Would you ever be likely to favor a tax increase? Under what circumstances, if any, might a tax increase be beneficial to the economy?
What recent changes in government spending or tax policy have been in the news? How would you expect these to affect GDP and employment levels?
What is the initial effect of this change on inventories? How will firms change production in response to this change in inventories?
Which curve shifts and in what direction? What happens to the equilibrium interest rate? What happens to the equilibrium amount of investment?
What is the income/spending multiplier? Explain why a drop in autonomous intended investment, or in autonomous consumption, leads to a much larger drop.
How can an increase in saving (if not balanced by an increase in intended investment) cause a shrinkage of the output-income-spending flow?
Have you ever read article or editorials that claim that consumption is essential for a healthy economy. What are some arguments for the opposite point of view?
What does employment flexibility mean from the perspective of workers? From the perspective of employers?
What population is included in the official household survey that measures employment and unemployment?
Which arguments seem convincing to you, those of classical labor market theorists, sticky wage theoris. What are some strengths and weaknesses of each argument?
Why do you know why this hardship occurred? Would you characterize this unemployment as frictional, structural, or cyclical?
What might be some of the factors that make frictional unemployment last a longer or shorter period of time?
What evidence have you seen-in your own family or in the media-of increasing flexibility in labor markets?
What was the labor force experience of your grandparents (or others whom you know in that generation? Of your parents (or their generation)?
Do you know anyone who is a discouraged worker? How about someone working part time for economic reasons?
How would the BLS classify you, personally, on basis of your activities? Is it true that people who are not working are generally counted as unemployed?
What are the trade-offs associated with the exchange rate level, that is, what are the costs and benefits of an excessively appreciated currency?
Discuss the costs and benefits of a floating exchange rate system, identifying which groups benefit and which are harmed with adoption of this type of regime.
Why would the country be more inclined to join a monetary union than any other country whose money demand would be more stable over the same period of time?