RQch15 - Ch 15 1.6 Baby boomers are those who were born...

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Ch 15 1.6 Baby boomers are those who were born from the end of World War II through the early 1960s. Birth rates were high during the baby boom period and much lower in the years after the baby boom. As a result, there are more baby boomers than are members of the generations born after the baby boom. So, as the baby boomers retire there will be relatively fewer workers paying social insurance taxes, which are used to fund Social Security and Medicare payments. A funding crisis looms as the large number of baby boomers retire and begin to claim Social Security and Medicare payments. 2.4 a. expansionary fiscal policy; b. although a decrease in defense spending will lead to a drop in aggregate demand, it is not part of fiscal policy because it is not intended to achieve a macroeconomic policy goal; c. it is a monetary policy, NOT a fiscal policy; d. contractionary fiscal policy; e. expansionary fiscal policy 2.5 The remark is wrong. With a multiplier of 2, an increase of $250 billion in government spending will increase real GDP by $500 billion. 3.3 Keynes is discussing the multiplier effect. By repercussions, he means the rounds of spending and new production set off by an initial increase in autonomous expenditures. In his writings, Keynes believed that the government purchases multiplier was about 10. Therefore,
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This note was uploaded on 04/22/2010 for the course ECONOMICS ECON1002 taught by Professor None during the Spring '10 term at Hong Kong Institute of Vocational Education.

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RQch15 - Ch 15 1.6 Baby boomers are those who were born...

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