2. What is NAIRU and why is it important. What problems will the economy face

2. What is NAIRU and why is it important. What problems will the economy face if there is a large output gap? 3. Explain the impact of government expenditures on the equilibrium level of income. How does this differ from the effect of changes in taxation? What is the multiplier? 4 . Explain the impact of the time lags associated with discretionary fiscal policy.
1. What is the business cycle? How does unemployment and inflation vary over the business cycle? 2. What is NAIRU and why is it important. What problems will the economy face if there is a large output gap? 3. Explain the impact of government expenditures on the equilibrium level of income. How does this differ from the effect of changes in taxation? What is the multiplier? 4 . Explain the impact of the time lags associated with discretionary fiscal policy. Which do you think is the most important? Do you think fiscal policy may be easier to operate during an inflation or a recession? Explain. 5. What is the economic impact of a federal budget deficit? Describe the effect of debt financing accomplished by a sale of bonds to the general public