1. One area of disagreement among economists is the impact that income tax cuts will have on a budget deficit.Explain in detail the reasoning of both sides of this argument.
2. Suppose the governments of Mexico and the United States agree to a fixed exchange rate.Describe some of the options available to the Mexican government if the peso was persistently overvalued, creating a surplus of pesos on the foreign exchange market.Be sure to explain how each of these options would be expected to impact the supply and/or demand for Mexican pesos.