a.What are the traditional benefits and costs of fiscal deficits in the short and longer run?
b.Explain and distinguish the temporal and intertemporal government budget constraints.
c.Explain the intuition behind the key condition for whether the intertemporal one binds (r – gy >0). What are the implications if this doesn’t bind?
d.How does the IGBC help us to decide whether or not the large fiscal policy stimulus accompanied by government debt issue in response to the COVID-19 shock might lead to higher inflation?
