Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
3. “A wider commitment to enforce "Buy American" laws”, would it count as positive economics or normative economics? Explain.
![To address the immediate impact of the coronavirus crisis,
Mr Biden has vowed to spend "whatever it takes" to
extend loans to small businesses and increase direct
money payments to families. Among the proposals are an
additional $200 in Social Security payments per month,
rescinding Trump-era tax cuts and $10,000 of student loan
forgiveness for federal loans.
Mr Biden's broader economic policies, dubbed his "Build
Back Better" plan, aim to please two constituencies that
traditionally support Democrats - young people and blue
collar workers.
He supports raising the federal minimum wage to $15
(£11.50) an hour- a measure that is popular among young
people and that has become something of a totem figure
for the party in 2020, and a sign of its move to the left. He
also wants a $2tn investment in green energy, arguing that
boosting green manufacturing helps working class union
workers, who perform most of those jobs.
There is also a $400bn pledge to use federal dollars to
buy American goods, alongside a wider commitment to
enforce "Buy American" laws for new transport projects.
Mr Biden was previously criticised for backing the North
American Free Trade Agreement (Nafta), which critics say
shipped jobs overseas.
His 2020 plan calls for the federal govermment to invest
$300bn in US-made materials, services, research and
technology.
Source: https://www.bbc.com/news/election-u5-2020-53575474
Here additional source:
https://buildbackbetter.com/priorities economic-recovery
Questions
1. Which of Mr. Biden proposals are likely to impact
aggerate demand (AD)? Give one example for each:
what will increase AD and decrease AD. Explain how!
why. [Hint: aggregate demand is composed of
spending: C, I, G, and (X-M)]
2. Which of Mr. Biden proposals focus on impacting
aggerate supply? Give one example and explain how
it will impact AS. [Hint: think AS in terms of USA
economic output (RGDP))
3. "A wider commitment to enforce "Buy American
laws", would it count as positive economics or
normative economics? Explain.
4. "He also wants a $2tn investment in green energy."
What would be the full impact of this investment on
RGDP? Most likely, will it be less than, equal to, or
more than $2tn? Explain.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F154543aa-fab4-4dab-ba0d-e8135da12f65%2F25bedd02-881b-4a03-9156-05b954a62a97%2F48gsx21_processed.jpeg&w=3840&q=75)
Transcribed Image Text:To address the immediate impact of the coronavirus crisis,
Mr Biden has vowed to spend "whatever it takes" to
extend loans to small businesses and increase direct
money payments to families. Among the proposals are an
additional $200 in Social Security payments per month,
rescinding Trump-era tax cuts and $10,000 of student loan
forgiveness for federal loans.
Mr Biden's broader economic policies, dubbed his "Build
Back Better" plan, aim to please two constituencies that
traditionally support Democrats - young people and blue
collar workers.
He supports raising the federal minimum wage to $15
(£11.50) an hour- a measure that is popular among young
people and that has become something of a totem figure
for the party in 2020, and a sign of its move to the left. He
also wants a $2tn investment in green energy, arguing that
boosting green manufacturing helps working class union
workers, who perform most of those jobs.
There is also a $400bn pledge to use federal dollars to
buy American goods, alongside a wider commitment to
enforce "Buy American" laws for new transport projects.
Mr Biden was previously criticised for backing the North
American Free Trade Agreement (Nafta), which critics say
shipped jobs overseas.
His 2020 plan calls for the federal govermment to invest
$300bn in US-made materials, services, research and
technology.
Source: https://www.bbc.com/news/election-u5-2020-53575474
Here additional source:
https://buildbackbetter.com/priorities economic-recovery
Questions
1. Which of Mr. Biden proposals are likely to impact
aggerate demand (AD)? Give one example for each:
what will increase AD and decrease AD. Explain how!
why. [Hint: aggregate demand is composed of
spending: C, I, G, and (X-M)]
2. Which of Mr. Biden proposals focus on impacting
aggerate supply? Give one example and explain how
it will impact AS. [Hint: think AS in terms of USA
economic output (RGDP))
3. "A wider commitment to enforce "Buy American
laws", would it count as positive economics or
normative economics? Explain.
4. "He also wants a $2tn investment in green energy."
What would be the full impact of this investment on
RGDP? Most likely, will it be less than, equal to, or
more than $2tn? Explain.
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