Krugman Sees 'Deficit-Palooza' Under Trump, Surprised by Labor Market

The video discusses the concept of 'zombie ideas' in politics, focusing on tax cuts and austerity measures. It explores the impact of these measures on economic recovery and the relationship between spending, unemployment, and inflation. The role of the Federal Reserve is analyzed, highlighting its challenges in managing interest rates and asset prices. The video also considers the potential economic risks posed by unexpected shocks like the coronavirus, emphasizing the interconnectedness of global supply chains.

What is a 'zombie idea' in the context of politics?

• An idea that is universally accepted

• An idea that is only theoretical

• An idea that is proven false but persists

• An idea that is innovative and new

What was the primary concern that led to austerity measures in 2010?

• High inflation rates

• Excessive government spending

• Debt concerns

• Trade deficits

Why was the lack of inflation surprising despite low unemployment and high deficits?

• Because inflation is only affected by interest rates

• Because inflation is not related to unemployment

• Because high deficits usually lead to deflation

• Because low unemployment typically causes inflation

What is the relationship between low interest rates and asset prices?

• Low interest rates have no effect on asset prices

• Low interest rates lead to high asset prices

• Low interest rates lead to low asset prices

• Low interest rates cause asset prices to fluctuate

What is the skepticism around quantitative easing?

• It is thought to have limited effectiveness

• It is considered a powerful tool

• It is seen as unnecessary

• It is believed to be harmful to the economy

How does the global supply chain affect the impact of exogenous shocks like the coronavirus?

• It isolates the impact to specific regions

• It amplifies the impact globally

• It prevents any significant impact

• It only affects the manufacturing sector

What is a major limitation of central banks in responding to economic shocks?

• They can only increase interest rates

• They have too much room to cut interest rates

• They have limited room to cut interest rates

• They are not allowed to change interest rates