Chapter 32 — Exercises

A1. Distinguish automatic stabilizers from discretionary fiscal policy. Give two examples of each. A2. If the multiplier is 1.5 and the government spends $200B on infrastructure, how much does GDP rise? A3. Why is the multiplier larger during recessions than near full employment? A4. Compare ARRA ($831B) to the COVID fiscal response ($5T+). Which had better outcomes? Why? A5. "Austerity during a recession deepens the recession." Apply the multiplier and AS-AD frameworks. A6. The Reinhart-Rogoff paper contained a coding error. Describe the error and its policy consequences. A7. Is the U.S. national debt unsustainable? Apply the debt-to-GDP framework. What would need to change? A8. Look up the federal deficit on FRED (FYFSD). Plot since 2000. Identify the 2009 and 2020 spikes. What caused each?

Selected answers in appendices/answers-to-selected.md.