1. To what degree is the public debt a burden to future generations?
2. Suppose income taxes and unemployment compensation were cut by an equal amount. How would aggregate demand be affected?
3. As late as 1992, we were running budget deficits of nearly $300 billion. How do you explain the decline in the deficits through the rest of the decade of the 1990s?
4. Explain the crowding-in and crowding-out effects. How valid are these two concepts?
5. If you had a job as a financial counselor and a bad recession hit, what advice would you give your clients to enable them to keep their heads above water?
6. Using the AD/AS diagram possibilities, explain which diagram explains the scenarios and why that is the diagram that fits the scenario best:
7. U.S. Federal Reserve allows money supply to fall during 1930s
Federal spending increased during World War II
Investment tax credits of 1960s
Oil price increases of 1970s
8. Using the Keynesian aggregate expenditure model, sketch the diagram corresponding to the following historical events and explain their importance:
Tax increases of 1990s
Vietnam War spending of 1960s–1970s
Tax cuts of 2000s