1 Policymakers who want to stabilize the economy must decide how much to change the money supply, government spending, or taxes. Why is it difficult for policymakers to choose the appropriate strength of their actions (Mankiw, 2015)?
2 What are the pros and cons of why we should or shouldn’t stabilize the economy?
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3 What causes the lags in the effect of monetary and fiscal policy on aggregate demand. What are the implications of these lags for the debate over active versus passive policy?
4 What are and explain the six debates over macroeconomic
policy.
5 Explain how credibility might affect the cost of reducing inflation.
6 What adverse effects might be caused by tax incentives to increase saving?
7 What might motivate a central banker to cause a political business cycle. What does the political business cycle imply for the debate over policy rules?
8 How does monetary policy influence inflation and employment?
9 Does democracy stifle economic growth?
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