Modern Money Inflation Quiz

QUESTION #1: The President decides that he will hire 20 thousand new doctors for the inner cities, which have been traditionally underserved in their medical needs. He points out that this deficiency has been much to our country's detriment, lessening our future growth potential, our quality of life, and our local and national security. The President says it will cost $400 thousand per doctor per year, for a total of $8 billion annually, but that the need is so critical that the program will be paid for with deficit spending. Is this new program inflationary?

QUESTION #2: The President decides that he will hire 200 thousand new teachers for the inner cities, which have been traditionally underserved in their educational needs. He points out that this deficiency has been much to our country's detriment, lessening our future growth potential, our quality of life, and our local and national security. The President says it will cost $100 thousand per teacher per year, for a total of $20 billion annually, but that the need is so critical that the program will be paid for with deficit spending. Is this new program inflationary?

QUESTION #3: The President decides that he will hire 20 thousand new doctors for the inner cities, which have been traditionally underserved in their medical needs. He points out that this deficiency has been much to our country's detriment, lessening our future growth potential, our quality of life, and our local and national security. The President says it will cost $400 thousand per doctor per year, for a total of $8 billion annually, and that it will be funded under Pay-Go, with needed funds coming from other programs and/or new taxes. Is this new program inflationary?

EXTRA CREDIT: The President and Congress agree additional stimulus is needed, but Republicans insist it be in the form of tax cuts. Both sides agree to stop collecting the payroll tax (FICA) for two years, and that current benefits should be paid out of the Social Security Trust Fund. The program is enacted, and after just several months, the President's economic team announces that leading indicators show that the program will be having the desired effect. That very same afternoon, the lead Trust Fund accountant calls the President in a panic. A small arithmetic error has been made, and the Trust Fund is actually flat broke. As the story breaks in the next day's headlines, the stock market plunges, and hospitals are flooded with retired seniors in various states of serious medical distress. The President and Congress quickly enact emergency funding, ensuring that retirement benefits will continue to be paid. Is this new program inflationary?

Benedict@Large

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