1. Explain the main arguments in favor of economic stabilization during recessions. Explain why policy lags could make stabilization policies counterproductive.

2. What are the justifications given in favor of more government involvement in the market economy? What are the reasons given in favor of less government involvement in the market economy?

3. Should the government always balance its budget? If you think it should, what steps do you suggest that it should take to balance its budget?

4. What is the relationship between budget deficits and national (public) debt? Why has the USA national debt been increasing for decades?

5. Studies indicate that the changes in fiscal and monetary policy affect the 3 economic agents in the economy (households, firms, and government). How do the changes in monetary and fiscal policy instruments affect you personally or work wise? Policymakers who want to stabilize the economy must decide how much to change the money supply, government spending, or taxes. Why is it difficult for policymakers to choose the appropriate strength of their actions? Which method do you think is better in the long run? Why?

6. Some economists and policymakers argue in favor of replacing the current income tax in the USA with consumption tax. What are your opinions on the issue? How do you think such change impacts your income and expenditure pattern? Which tax method do you prefer-income tax or consumption tax? Why? What are the pros and cons of the two tax methods?

There is no word requirement as long as the questions are answered.