Problem
I. What is the difference between what Supply Side economists expect to happen when taxes are cut and what Keynesian and other economists expect to happen when taxes are cut? (Explain in turn which curve Supply Siders expect to shift and which way,, and which curve Keynesians expect to shift, and which way.)
II. i. What are two examples of "automatic stabilizers" that might kick in during a recession to reduce the size of the downturn?
ii. Which component of Aggregate Demand (C, I, G, or X-M?) do this automatic stabilizers affect?
III. What is the difference between a government budget deficit and the national debt?