Question: Please help! Explain how built-in (or automatic) stabilizers work. What are the differences between proportional, progressive, and regressive tax systems as they relate to an

Please help!

  • Explain how built-in (or automatic) stabilizers work. What are the differences between proportional, progressive, and regressive tax systems as they relate to an economy's built-in stability?

  • Briefly state and evaluate the problem of time lags in enacting and applying fiscal policy. How might "politics" complicate fiscal policy? How might expectations of a near-term policy reversal weaken fiscal policy based on changes in tax rates? What is the crowding out effect and why might it be relevant to fiscal policy?

  • Why did the budget surpluses in 2000 and 2001 give way to a series of budget deficits beginning in 2002? Why did those deficits increase substantially beginning in 2008?

  • Distinguish between the total U.S. debt and the debt held by the public. Why is the debt as a percentage of GDP more relevant than the total debt? Contrast the effects of paying off internally held debt and paying off an externally held debt.

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