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The government is debating whether to spend $100 billion today to address climate change. They estimate that this current expenditure will reduce future damages by
The government is debating whether to spend $100 billion today to address climate change. They estimate that this current expenditure will reduce future damages by $700 billion, but that these benets will not be recognized until 100I years om now. a. Conduct a cost-benet analysis of spending the $100 billion today to avert $700 billion in damages in 100 years, assuming a 5% interest rate. b. An alternative plan would be to invest the $100 billion today at 5% and use the earnings to pay for the damages in 100 years. Would this be a better policy? Explain why or why not. Answer the following questions about Budget Analysis 8:: Decit Spending a. What is the difference between decit and debt? b. Why would a government operate with a decit? What are the costs and benets of decit spending? c. Do you think that the government should be allowed (or should allow itself] to accrue large amounts of debt? Should we (the US) focus on or put a higher priority on paying off our debt? Explain in a few sentences. Consider a community with three voters: Sam, Barbara, and Nathan, who use majority rule to decide how much money to spend on public parks. They have three options for spending: High (H), Medium (M), and Low (L). They rank their three options as follows: a. Consider all pairwise elections (H v. M: H v. L; M v. L). What is the outcome in each election? Is there a majority rule that would lead to a stable outcome on park spending? b. Would giving one person the ability to set the agenda affect the outcome? Explain
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