1. Describe and explain the fiscal policy that would be best for promoting long-run economic growth. 2. Describe and explain the monetary policy that would be best for promoting long-run economic growth. 3. According to a recent story in the Wall Street Journal, many people in the so-called "millennial" generation have a goal of retiring by the time they are 50 (or even younger). So they are saving as much of their incomes as possible now. a. Would increased saving be A Good Thing or A Bad Thing for the U.S. economy in the short run? Explain your answer using Aggregate Demand - Aggregate Supply analysis. (Your answer should explain what, if anything, increased saving does to Aggregate Demand; what, if anything, increased saving does to Aggregate Supply; and what, if anything increased saving does to GDP, unemployment, and inflation as a result. Explain" means state what would happen and why. Describe the process by which a change in Aggregate Demand or Aggregate Supply causes changes in GDP, unemployment, and inflation.) b. Would increased saving be A Good Thing or A Bad Thing for the U.S. economy in the long run? Explain your answer using Aggregate Demand - Aggregate Supply analysis. (Your answer should explain what, if anything, happens to Aggregate Demand; what, if anything, happens to Aggregate Supply; and what, if anything happens to GDP, unemployment, and inflation as a result. "Explain" means state what would happen and why. Describe the process by which a change in Aggregate Demand or Aggregate Supply causes changes in GDP, unemployment, and inflation.) 4. Consider the statistics below for the countries of French Polynesia and Botswana. Botswana is in southern Africa; French Polynesia is an island nation in the South Pacific. (French Polynesia's capital is mentioned in the great song "Southern Cross," performed most notably by Crosby Stills & Nash: "Got out of town on a boat for the Southern islands/Sailing a reach before a followin' sea/She was makin' for the trades on the outside/And the downhill run to Papeete" -- actually, that's got nothing to do with this question - I just really like that song. Here's the link if you want to check it out: https://www.youtube.com/watch?v=UNmtd_31-lY) French Polynesisa Botswana GDP $5.5 billion $37 billion GDP per capita $17,000 $17,000 Unemployment rate 21% 20% Inflation rate 1.8% 1.7% Budget deficit/surplus Surplus 1% of GDP Deficit 1% of GDP Taxes 40% of GDP 34% of GDP Savings rate** 10% of GDP 42% of GDP Interest rate on bank loans* 11% 7% * that is the interest rate that banks charge on loans to businesses ** that is the percentage of income that is saved, on average, rather than spent a. Based on GDP alone, which country is has the better prospects for long-run economic growth? Justify your answer, being sure to connect current GDP to future economic growth. b. Based on GDP per capita alone, which country is has the better prospects for long-run economic growth? Justify your answer, being sure to connect current GDP per capita to future economic growth. c. Based on the unemployment rate alone, which country is has the better prospects for long-run economic growth? Justify your answer, being sure to connect current unemployment to future economic growth. d. Based on the inflation rate alone, which country is has the better prospects for long-run economic growth? Justify your answer, being sure to connect current inflation to future economic growth. e. Based on budget deficit or surplus alone, which country is has the better prospects for long-run economic growth? Justify your answer, being sure to connect current budget deficit or surplus to future economic growth. f. Based on tax rates alone, which country is has the better prospects for long-run economic growth? Justify your answer, being sure to connect current tax rates to future economic growth. g. Based on the savings rate alone, which country is has the better prospects for long-run economic growth? Justify your answer, being sure to connect current savings rate to future economic growth. h. Based on the interest rate alone, which country is has the better prospects for long-run economic growth? Justify your answer, being sure to connect current interest rate to future economic growth. i. Now let's put it all together. Based on all of this information which country seems better poised for LONG RUN ECONOMIC GROWTH (or are they equally set for long-run economic growth)? That is, which country would you expect to experience greater economic growth in the near future? Justify your answer. As part of your justification, explain which of these items is likely to have the biggest impact on economic growth (that is, which of these items are more important than the others