1. If you had the task of cutting government spending where would you begin? Which programs would you cut? Why?
(Respond in 3 to 5 lines)

3. Government Spending
Essential Questions: How can changes in government spending policies impact the U.S. economy?

5. Mandatory Spending -
spending that is not dependent on periodic appropriations bills. Consists mostly of “transfer payments” (such as Social Security benefits, Medicare, and Medicaid). Also includes salaries of federal judges and interest on the debt. This spending fulfills promises of the past.

6. Discretionary Spending – spending that requires an annual appropriations bill from Congress (includes decisions on how much money to spend on National Defense, Homeland Security, roads, schools, etc.)

7. http://www. budget. state. pa. us/portal/server
For current budget, search for “budget in brief”.

10. “In the long run we are all dead”

11. John Maynard Keynes vs. F.A. Hayek
Video
Song

12. “Fear the Boom and Bust” Keynes
“boost aggregate demand”
“C, I, G, all together gets to Y”
“We need more government spending, now it’s stimulus season”
“in the long run we are all dead”
“the state should fill the gap”
“Public works, digging ditches, war has the same effect”
“The multiplier driving higher the economy’s health”
If there’s a “liquidity trap”…“deficits could be the cure”

13. “Fear the Boom and Bust” Hayek
“you provide them with cover to sell us a free lunch then all we’re left with is debt”
“Real savings come first if you want to invest”
“It’s the boom that should make you feel leery”…“the boom plants the seeds for its future destruction”
“And the grasping for resources reveals there’s too few. So the boom turns to bust as the interest rates rise”