Week2 discussion questions

Week2 discussion questions - Economics 21 Week 2:...

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Economics 21 Spring 2008 Week 2: Discussion Section These questions relate to the two attached articles: “How to Stop the Downturn” by Joseph Stiglitz , and “Beyond the Stimulus Package” Sunday’s Editorial in the NYTimes.  1) Both articles state that while a stimulus package is necessary in the short run, it has adverse  consequences for the long run:   a) What is/are the long run problems in the U.S. economy that the stimulus package will  exacerbate [Hint: think Cline]? Government deficit, adversely affect the trade deficit because of  the identities if G goes down then the deficit will be worse.    b) How does the stimulus package exacerbate these long run problems [Hint: Box 1]? 2) Both articles say that it is important to get the most “bang(more GDP) for the buck(dollar  increase in the budget deficit)” in the stimulus package.  What does “bang for the buck” mean  (what constitutes “bang” and whose “buck” are we talking about).  With respect to “bang for the  buck”: For every exogenous variable there is a multiplier who want to do whatever we can to  raise GDP. We want to raise I for the future. Low discount rate- not impatient willing to defer 
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This note was uploaded on 04/07/2008 for the course PHI 101 taught by Professor Finberg during the Spring '08 term at Swarthmore.

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Week2 discussion questions - Economics 21 Week 2:...

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