Assignment

1. Why are trade agreements important for the various countries involved?

2. How is international trade related to the US standard of living as opposed to the standard of living of a small industrial national or a developing nation?

3. How does international trade affect a country's standard of living? What impact does it have on the way Americans live life, spend, consume, and so on?

4. 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?

5. 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?

6. Explain how credibility might affect the cost of reducing inflation.

7. Why some economists are against a target of zero inflation?

8. What adverse effects might be caused by tax incentives to increase saving?