Test Your Knowledge Questions for September 27 Econ 1 Lecture
- Since the interest rate on Treasury debt r is less than the economy’s growth rate g, our budgetary situation is fine, except that we want short-term deficits in order to reduce cyclical unemployment—right?
- How do you calculate what the long-run debt-to-GDP ratio will be?
- Why is it important that a government run or be expected to run a permanent primary surplus?
- Even if the national debt is sustainable, why is it good to run a balanced budget—or even a surplus—over the business cycle?
- Why don’t governments run balanced budgets over the cycle?
- What is James Buchanan’s critique of cyclical deficit spending?
- What is the Laffer curve?
- Should you ever trust the Wall Street Journal?
