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
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 income as possible now. a. Would an 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'l 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 ination.) Would an 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 ination.) 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 8: 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 | just really like that song. Here's the link if you want to check it out: htt 5: www. outube.com watch?v=UNmtd 31IY \" Budget DeficitlSurplus Surplus 1% of GDP Deficit 1% of GDP 40% mm 34% of GDP 10% 0mm 429mm Interest Rate on Bank loans 11% \" 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 has the better prospects for long-run economic growth? Justify your answer, being sure to connect current GDP to future economic growth. Based on GDP per capita alone, which country has the better prospects for long-run economic growth? Justify your answer, being sure to connect current GDP per capita to future economic growth. Based on the unemployment rate alone, which country has the better prospects for long-run economic growth? Justify your answer, being sure to connect current unemployment to future economic growth. Based on the inflation rate alone, which country has the better prospects for long-run economic growth? Justify your answer, being sure to connect current inflation to future economic growth. Based on budget decit or surplus alone, which country has the better prospects for long-run economic growth? Justify your answer, being sure to connect the current budget deficit or surplus to future economic growth. Based on tax rates alone, which country has the better prospects for long-run economic growth? Justify your answer, being sure to connect current tax rates to future economic growth. Based on the savings rate alone, which country has the better prospects for long-run economic growth? Justify your answer, being sure to connect the current savings rate to future economic growth. Based on the interest rate alone, which country has the better prospects for long-run economic growth? Justify your answer, being sure to connect the current interest rate to future economic growth. Now let's put it all together. Based on all 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 ofyour 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?) 5. Consider three types of tax system: Progressive Income Tax; Flat Income Tax: and National Sales Tax with no Income Tax. Rank these in order from \"best for long-run economic growth" to \"worst for economic growth\" Then justify and explain your answer. As part of yourjustification and explanation, your answer will identify the relevant characteristics of each tax system. Your justification will also explain how each of these tax systems affects long-run economic growth in terms of Aggregate Demand and Aggregate Supply. That is, how does each of these tax systems affect Aggregate Demand or Aggregate Supply in such a way that leads to long-run economic growth? Your justication and explanation count for all the points on this question (that is, there is no \"correct\" ranking.)
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