1. The government accounts directly for about 20% of the GDP. Why is government such a major factor in our economy?

2. Is the government debt (over 23 trillion dollars) a problem for future generations? Explain.

3. How do the roles of government affect your daily life? Would your life be better without government?

4. People want tax breaks. To cut taxes, spending must be cut (at least in theory). Why are spending cuts so tough to make?

5. What is the difference between the federal deficit and the national debt?

6. When can deficits actually help the economy?

7. "Entitlement and mandatory" spending is part of the Budget. Why are the terms entitlement and mandatory misleadung?

8. Why do deficits rise during recessions?

9. Why is there always so much debate and anger about the role of government in providing a safety net (welfare)?

10.What is the main advantage of automatic stabilizers over discretionary fiscal policy?

11. Explain how automatic stabilizers work.

12. What would happen if expansionary fiscal policy was implemented in a recession but, due to lag, did not actually take effect until after the economy was back to potential GDP?

13. What would happen if contractionary fiscal policy were implemented during an economic boom but, due to lag, it did not take effect until the economy slipped into recession?

14. Why are sales taxes regressive?

15. Why would the tax incidence mostly fall on smokers if the taxes on cigarettes went up?