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January 18, 2020

PuBLIC fINANCE

Business & Finance

1Suppose someone says that a relatively small percentage of Americans own a large percentage of total assets and that therefore the government should redistribute wealth to those less fortunate. Which part of that statement is normative and which part is positive, if any? Explain.

2Suppose the economy is in a recession and that revenues for the current year are equal to expenditures.

(a) What is the budget deficit in this case?

(b) How would a cyclically adjusted budget deficit be different? Explain.

3Are all of the indirect effects of government intervention in the economy unintended effects? Explain.

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