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Category: Macroeconomics
What is the fundamental trade-off that society faces if it chooses to save more? How might the government increase national saving?
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Category: Macroeconomics
Explain how each of the following policies redistributes income across generations. Is the redistribution from young to old or from old to young? a. an increase in the budget deficit b. more generous subsidies for education loans c. greater investments in highways and bridges d. an increase in Social Security benefits Explain how each of the follow...
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Category: Macroeconomics
Suppose the federal government cuts taxes and increases spending, raising the budget deficit to 12 percent of GDP. If nominal GDP is rising 5 percent per year, are such budget deficits sustainable forever? Explain. If budget deficits of this size are maintained for 20 years, what is likely to happen to your taxes and your children's taxes in the fu...
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Category: Macroeconomics
Why are the benefits of reducing inflation permanent and the costs temporary? Why are the costs of increasing inflation permanent and the benefits temporary? Use Phillips-curve diagrams in your answer.
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Category: Macroeconomics
Chapter 2 explains the difference between positive analysis and normative analysis. In the debate about whether the central bank should aim for zero inflation, which areas of disagreement involve positive statements and which involve normative judgments?
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