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The Development of Law

Credit: aiche.org

Have you ever used the term, “that should be outlawed!” Think of an issue that you believe should be illegal. It can be something light-hearted such as a law against man-buns or wearing socks with sandals. Explain how this cause becomes law. Consider constitutional challenges, both state and federal, support/opposition parties, enforcement policies, and criminal consequences, sentencing and punishment.

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Government Debt

Credit: china.org.cn

1. How does the evolution of the debt-to-GDP ratio Bt/Yt depend on g (the growth rate) and i (the interest rate)?

2. Consider the steady-state debt-to-GDP ratio bss = B Y = (G − T)/Y g − i

(a) Derive this relationship mathematically. What does this relationship describe?

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Deflation & Liquidity Trap

Credit: thebalance.com

 1. Inflation is usually understood to mean positive inflation – i.e., an increase in the general price level over time. Given this, what do you think “deflation” means?

2. Using the Fisher equation, describe why deflation can be dangerous. In the context of a recession, explain how a potential “deflationary spiral” would work.

3. If you were the Fed Chairman, how would you respond to deflation?

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