Question 1

A higher return on saving ______ the amount a household needs to save to achieve any target level of future consumption. This effect on saving is called the _______ effect. If the income effect is large enough, then a reduction in taxes on saving might ______ tax revenues.

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Question 2

Why might reforms to encourage saving lead to a less egalitarian society?

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Question 3

What fiscal policies did the government implement in response to the 2008-2009 recession? Can we be certain that these policies were effective? Explain.

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Question 4

Suppose a 25-year-old worker purchases a $5,000 bond that pays 6% interest per year which she plans to withdraw when she retires in 40 years. How much will the $5,000 accumulate to in 40 years? If the worker faces a marginal tax rate of 30% on interest income, how much will the $5,000 accumulate to in 40 years?

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Question 5

Suppose tax policies are changed to encourage saving. Explain how the income effect and substitution effect influence the amount saved.

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Question 6

Explain what is meant by saying that capital income is taxed twice.

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Question 7

Suppose that changes in aggregate demand tended to be infrequent and that it takes a long time for the economy to return to long-run output. How would this affect the arguments of those who oppose using policy to stabilize output?

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Question 8

Suppose a country has had a high and relatively stable inflation rate for a long time. How might this affect the costs and benefits of inflation reduction?

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Question 9

In addition to the tax code, other policies reduce the incentives for people to save Provide an example.

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Question 10

Explain why policy lags could make stabilization policies counterproductive.

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Question 11

What is the political business cycle and how does it relate to whether the central bank should have discretion or use a rule?

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Question 12

Carefully explain how monetary policy can be used to counter a recession. Explain what the central bank does as well as how its actions affect the economy. Under what circumstances is fiscal policy especially useful?

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Question 13

Why might tax cuts be more appropriate than increasing government expenditures to counter recessions? Is there any evidence for this thinking?

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Question 14

Explain the main arguments in favor of economic stabilization.

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Question 15

Explain the time inconsistency of monetary policy.

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Question 16

Why might government expenditures be more appropriate than tax cuts to counter recessions? Is there any evidence for this thinking?

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Question 17

Which kind of lag is important for monetary policy? Which kind of lag is important for fiscal policy?

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Question 18

Describe three costs of inflation.

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Question 19

Suppose that changes in aggregate demand tended to be infrequent and that it takes a long time for the economy to return to long-run output. How would this affect the arguments of those who oppose using policy to stabilize output?

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Question 20

What's the basis for arguing that deficits are likely to lead to lower living standards in the future?

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Quiz 36: Six Debates Over Macroeconomic Policy

A higher return on saving __ the amount a household needs to save to achieve any target level of future consumption. This effect on saving is called the _ effect. If the income effect is large enough, then a reduction in taxes on saving might ____ tax revenues.

Why might reforms to encourage saving lead to a less egalitarian society?

What fiscal policies did the government implement in response to the 2008-2009 recession? Can we be certain that these policies were effective? Explain.

Suppose tax policies are changed to encourage saving. Explain how the income effect and substitution effect influence the amount saved.

Explain what is meant by saying that capital income is taxed twice.

Suppose that changes in aggregate demand tended to be infrequent and that it takes a long time for the economy to return to long-run output. How would this affect the arguments of those who oppose using policy to stabilize output?

Suppose a country has had a high and relatively stable inflation rate for a long time. How might this affect the costs and benefits of inflation reduction?

In addition to the tax code, other policies reduce the incentives for people to save Provide an example.

Explain why policy lags could make stabilization policies counterproductive.

What is the political business cycle and how does it relate to whether the central bank should have discretion or use a rule?

Carefully explain how monetary policy can be used to counter a recession. Explain what the central bank does as well as how its actions affect the economy. Under what circumstances is fiscal policy especially useful?

Why might tax cuts be more appropriate than increasing government expenditures to counter recessions? Is there any evidence for this thinking?

Explain the main arguments in favor of economic stabilization.

Explain the time inconsistency of monetary policy.

Why might government expenditures be more appropriate than tax cuts to counter recessions? Is there any evidence for this thinking?

Which kind of lag is important for monetary policy? Which kind of lag is important for fiscal policy?

Describe three costs of inflation.

Suppose that changes in aggregate demand tended to be infrequent and that it takes a long time for the economy to return to long-run output. How would this affect the arguments of those who oppose using policy to stabilize output?

What's the basis for arguing that deficits are likely to lead to lower living standards in the future?