- Identify
historical examples of fiscal policies and explain whether these policies
were adopted to influence levels of output, employment, prices or
all three.
- Outline
fiscal policies you would recommend to correct each of the following:
(a) rising unemployment and (b) rising inflation. Explain each recommendation.
- Explain
how an additional $2 billion of federal spending on highways, financed
by federal government borrowing, can reduce private investment spending
in the economy in the long run. (HINT: think of crowding out)
- Explain
how the federal debt is financed through the sale of government securities
and identify the percentage of the debt owed to foreigners.
- Explain
the difference between the budget deficit and the national debt. Then
determine how long it would take to pay off all of the national debt
at the current level of GDP if all GDP were devoted to that purpose.
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