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Practice Questions
Will austerity work? Practice Questions
Complete the government budget constraint. Government Spending = _________________ +_______________.
*
a. tax revenue, borrowing
b. investment, net exports
c. consumption, tax revenue
Which of the following is an issue with raising taxes?
*
a. higher taxes damage productive activity
b. higher taxes depress aggregate demand
c. both a. and b.
Which of the following is an issue with cuts in government spending?
*
a. increases in aggregate demand
b. civil unrest
c. a disproportionate shift in investment from short-term to long-term investment
Suppose a nation cuts government spending or increases taxes. This reduces GDP in the short run.This in turn decreases tax revenue which leads to further tax increases or further cuts in governmentspending. This may lead to a ________________.
*
a. downward spiral
b. liquidity trap
c. both a. and b.
According to economic literature, the “best adjustments” for a struggling economy are:
*
a. falling exchange rates and depressed consumption
b. spending cuts and decent fundamentals
c. tax hikes and rising exchange rates
In order for austerity measures to work, ________________ must fall.
*
a. wages
b. consumption
c. both a. and b.
Submit
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The Eurozone Crisis
Course
(23 videos)
Background
The Three Sides of the Crisis
Practice Questions
The Case for Optimism
The Case for Pessimism
European Central Bank
Practice Questions
The Bailout funds
Practice Questions
The Bailout funds
Practice Questions
Why are high bond yields a problem?
Practice Questions
Banking and fiscal union
Practice Questions
The Italian Crisis of 2013
Practice Questions
Further analysis of the problems
The costs of leaving the Eurozone
Practice Questions
Remarks on individual countries
Practice Questions
Currency union collapse in history
Practice Questions
Indicators for Eurozone progress
Practice Questions
Life on the precipice
Practice Questions
Will austerity work?
Practice Questions
Effects on other multilateral agreements
Practice Questions
Underlying theory
Optimum currency areas
Practice Questions
Optimum currency areas and the Euro
Practice Questions
Why is the euro so bland?
Tyler Cowen lecture at the Bruno Leoni Institute (Optional)
Understanding the Eurocrisis (Optional)
Updates and extensions
Iceland: Causes of the Crisis
Iceland: Collapse
Exam
The Eurozone Crisis Exam
