Assignmen

Answer in your own words,the following questions in 100 words or more.

1. Recessions seem to occur every so often and to create economic hardship. One might think that those responsible for formulating fiscal and monetary policies could tame the business cycle and implement policies that would end recessions. Are recessions avoidable? If so, what would it take to keep recessions from affecting the macroeconomy? If they are unavoidable, what types of business can benefit from them? How would a recession affect your firm?

2. Explain two ways in which a government budget deficit hurts a future worker.

3. Consider what causes the lags in the effect of monetary and fiscal policy on aggregate demand. What are the implications of these lags for the debate over active versus passive policy?

4. Consider what might motivate a central banker to cause a political business cycle. What does the political business cycle imply for the debate over policy rules?

5. Be prepared to explain how credibility might affect the cost of reducing inflation.

6. Be prepared to explain why some economists are against a target of zero inflation?

7. Consider what adverse effects might be caused by tax incentives to increase saving?