1) Using the internet, find a newspaper article that focuses on recent economic events in China or Russia. What was the main point of the article? What facts or data did the article present? Did you agree or disagree with the author? Why?

2)The text describes several fiscal policy options to stabilize the economy: Changes in Government Purchases, Business Taxes, Income Taxes, and Transfer Payments. Based on what you've learned so far in the course, determine if the country you are living in currently needs economic stimulus or contraction. Describe how each policy option could specifically be used to change the national economy. Example: Country Z needs economic stimulus. The government could lower the business tax on buying new equipment. This would stimulate the economy because firms would have more money to invest which, in turn, increases demand in the equipment supply sector.

3)What is the difference between government expenditures and government purchases? How do the two variables differ in terms of their effect on GDP?

4)Federally funded student aid programs generally reduce benefits by $1 for every $1 that recipients earn. Do such programs represent government purchases or transfer payments? Are they automatic stabilizers?

5)Crowding out reduces the degree to which a change in government purchases influences the level of economic activity. Is it a form of automatic stabilizer?

6)Suppose an economy has an inflationary gap. How does the government's actual budget deficit or surplus compare to the deficit or surplus it would have at the potential output?

7)Suppose the president was given the authority to increase or decrease federal spending by as much as $100 billion in order to stabilize economic activity. Do you think this would tend to make the economy more or less stable?