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What are some ways fiscal policy might encourage economic growth

  1. Imagine an economy in which Ricardian equivalence holds. The economy has a budget of 50, a trade deficit of 20, private savings of 130, and investment of 100. If the budget deficit rises to 70, how are the other terms in the national saving and investment identity affected? (12 points)
  2. What are some ways fiscal policy might encourage economic growth? (11 points)
  3. Explain how decreased domestic investments that occur due to a budget deficit will affect future economic growth. (11 points)
  4. Explain how a shift from a government budget deficit to a budget surplus might affect the exchange rate. (11 points)
  5. What are the different policy tools for dealing with cyclical unemployment? (11 points)
  6. Demography can have important economic effects. The United States has an aging population problem. A. Describe two economic costs of an aging population (67 to 77 years). (5.5 points). B. Describe two economic benefits of having a young population (25 to 35 years). (5.5 points)
  7. Explain why it is difficult to set aside funds for investment when you are in poverty. (11 points)
  8. Is it possible to protect workers from losing their jobs without distorting the labor market? (11 points)
  9. Order the following three regions of the world according to their GDP per capita from highest to lowest: Latin America, South Asia, Europe. (12 points). Reference can be found in Principles of Macroeconomics 2nd edition by Steven A. Greenlaw and David Shapiro.

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