Informed postmortems of Ben Bernanke’s Fed chairmanship will judge favorably the Fed's creative and aggressive policy initiatives from autumn 2008 through early 2009.

Using surge pricing to allocate transportation services — such as Uber does with its cars — raises consumer welfare through various potential channels, such as increasing the supply of those services, allocating them to people who desire them the most, and reducing search and queuing costs.

Giving specific presents as holiday gifts is inefficient, because recipients could satisfy their preferences much better with cash.

Question A: The average US citizen would be better off if a larger number of low-skilled foreign workers were legally allowed to enter the US each year.

Question B: Unless they were compensated by others, many low-skilled American workers would be substantially worse off if a larger number of low-skilled foreign workers were legally allowed to enter the US each year.

In general, absent any inside information, an equity investor can expect to do better by choosing a well-diversified, low-cost index fund than by picking a few stocks.

Question A: Enactment of the Senate bill to subject the Federal Reserve's monetary policy and discount window decisions to an audit by the Comptroller General of the U.S. would improve the Fed's legitimacy without hurting its decision making.

Question B: The Fed should not reduce its purchases of mortgage-backed securities and treasurys until there is clearer evidence of strong and sustained employment growth.

Allowing Internet service providers to charge content companies for access to the ISPs' customers would provide net benefits to consumers.

Question A: If the United States fails to make scheduled interest or principal payments on government debt securities, even as an unintended consequence of political brinksmanship, US families and businesses are likely to suffer severe economic harm.

Question B: With or without a default, current uncertainty over future taxing and spending policies of the US government is likely to depress private investment and hiring by enough to reduce GDP growth by at least a quarter of a percentage point over the next 12 months.

Experience over the past 30 years shows that for the typical emerging market nation facing rapid capital outflows, spending foreign currency reserves to defend its currency is a better policy for its citizens than not doing so.

If regulators had not approved mergers in the past decade between major networked airlines, travelers would be better off today.

Conventional economic reasoning suggests that it would be a good policy to enact the recent Senate bill that would let undergraduate students borrow through the government Stafford program at interest rates equivalent to the primary credit rates offered to banks through the Federal Reserve's discount window.

An effective way to increase savings rates of employees whose firms have defined contribution plans is to combine automatic enrollment in those plans and periodic automatic increases in their contributions (with the ability to opt out of either).

Sustained tax and spending policies that boost consumption in ways that reduce the saving rate are likely to lower long-run living standards.

Slavery in the United States was eradicated because of social and political events, not because it was an unprofitable institution for slaveholders.

Restricting US exports of liquefied natural gas would have adverse effects on the US economy.

Question A: Because the US has underspent on new projects, maintenance, or both, the federal government has an opportunity to increase average incomes by spending more on roads, railways, bridges and airports.

Question B: Past experience of public spending and political economy suggests that if the government spent more on roads, railways, bridges and airports, many of the projects would have low or negative returns.

Reducing the income-tax deductibility of charitable gifts is a less distortionary way to raise new revenue than raising the same amount of revenue through a proportional increase in all marginal tax rates.

A bitcoin's value derives solely from the belief that others will want to use it for trade, which implies that its purchasing power is likely to fluctuate over time to a degree that will limit its usefulness.

Countries that let their debt loads get high risk losing control of their own fiscal sustainability, through an adverse feedback loop in which doubts by lenders lead to higher government bond rates, which in turn make debt problems more severe.

Refusing to liberalize trade unless partner countries adopt new labor or environmental rules is a bad policy, because even if the new standards would reduce distortions on some dimensions, such a policy involves threatening to maintain large distortions in the form of restricted trade.

Using government funds to guarantee preschool education for four-year olds would yield a much lower social return than the ones achieved by the most highly touted targeted preschool initiatives.

Question A:

Raising the federal minimum wage to $9 per hour would make it noticeably harder for low-skilled workers to find employment.

Question B:

The distortionary costs of raising the federal minimum wage to $9 per hour and indexing it to inflation are sufficiently small compared with the benefits to low-skilled workers who can find employment that this would be a desirable policy.

The average US citizen would be better off if a larger number of highly educated foreign workers were legally allowed to immigrate to the US each year.

The persistent deflation in Japan since 1997 could have been avoided had the Bank of Japan followed different monetary policies.

Because all federal spending and taxes must be approved by both houses of Congress and the executive branch, a separate debt ceiling that has to be increased periodically creates unneeded uncertainty and can potentially lead to worse fiscal outcomes.

The federal government would make the average U.S. citizen better off by using policies that directly focus more on increasing small business growth than growth of economic output overall.

The annual indexing of Social Security benefits to increases in the consumer price index for urban wage earners and clerical workers (the CPI-W) leads to higher benefits than would be required to compensate recipients for genuine cost-of-living increases.

The Brookings Institution recently described a US carbon tax of $20 per ton, increasing at 4% per year, which would raise an estimated $150 billion per year in federal revenues over the next decade. Given the negative externalities created by carbon dioxide emissions, a federal carbon tax at this rate would involve fewer harmful net distortions to the US economy than a tax increase that generated the same revenue by raising marginal tax rates on labor income across the board.

Question A: Because federal spending on Medicare and Medicaid will continue to grow under current policy beyond the 10-year window of most political budget debates, it is easy for a politician to devise a budget plan that would reduce federal deficits over the next decade without really making the U.S. fiscally sustainable.

Question B: Comparing two plans that would reduce federal budget deficits by identical amounts in each of the next 10 years, one that did so partly by reducing significantly the long-term growth rate of Medicare and Medicaid spending would do more to make the U.S. budget fiscally sustainable than one that did not lower the growth of these spending programs.

Question A: Taking into account all of the economic consequences — including the incentives of banks to ensure their own liquidity and solvency in the future — the benefits of bailing out U.S. banks in 2008 will end up exceeding the costs.

Question B: Because GM and Chrysler were bailed out in 2008-09, the U.S. unemployment rate was lower at the end of 2010 than it would it have been if Congress and the executive branch had not intervened.

Question C: Taking into account all of the economic consequences — including effects on corporate managers' incentives and on creditors' expectations of how their claims will be treated in future bankruptcies — the benefits of bailing out GM and Chrysler will end up exceeding the costs.

Question A: The U.S government should make further efforts to shrink the size of the country's largest banks — such as by capping the size of their liabilities or penalizing large banks more heavily through taxes or other means — because the existing regulations do not require the biggest banks to internalize enough of the "too-big-to-fail" risks that they pose.

Question B:

The economic benefits to the U.S. of having a handful of banks with balance sheets greater than $1 trillion are small.

Question A: The federal government would make the average U.S. citizen better off by using policies that directly focus more on increasing manufacturing employment than employment in other sectors.

Question B: Because firms and inventors do not capture the full returns from research and development, the government would increase the average well-being of Americans (and potentially of others too) by favoring R&D using the tax code.

Question A: Consider one of two proposals for restraining future Medicare spending, each by the same amount: The method that President Obama enacted in the Affordable Care Act — reducing Medicare-related payments to private insurers and altering the payment system for doctors and hospitals — imposes risks on future Medicare patients because over time the supply of doctors, hospitals and insurers willing to offer them health services may decline in response to restrained payments.

Question B: Consider the other of two proposals for restraining future Medicare spending, each by the same amount: The method that Governor Romney advocates — giving future seniors a fixed payment for premiums and letting private insurers compete with Medicare — imposes risks on future Medicare patients because competition may not be powerful to enough to offer future seniors the same quality of care that is currently promised without supplementing their premium support.

Claims by incumbent presidents and challengers about how many private-sector jobs can be created in a four-year period by sector-level or other targeted policies should be viewed as rough guesses, because overall macroeconomic conditions drive aggregate employment in ways that dominate any net effects of polices that focus on specific industries or households.

Question A: One drawback of taxing capital income at a lower rate than labor income is that it gives people incentives to relabel income that policymakers find hard to categorize as "capital" rather than labor".

Question B: Despite relabeling concerns, taxing capital income at a permanently lower rate than labor income would result in higher average long-term prosperity, relative to an alternative that generated the same amount of tax revenue by permanently taxing capital and labor income at equal rates instead.

Question C: Although they do not always agree about the precise likely effects of different tax policies, another reason why economists often give disparate advice on tax policy is because they hold differing views about choices between raising average prosperity and redistributing income.

Question A: By discounting pension liabilities at high interest rates under government accounting standards, many U.S. state and local governments understate their pension liabilities and the costs of providing pensions to public-sector workers.

Question B: During the next two decades some U.S. states, unless they substantially increase taxes, cut spending, and/or change public-sector pensions, will require a combination of severe austerity budgets, a federal bailout, and/or default.

Question A: Even if the third round of quantitative easing that the Fed recently announced increases real GDP growth over the next two years, the increase will be inconsequential.

Question B: Even if the third round of quantitative easing that the Fed recently announced increases annual consumer price inflation over the next five years, the increase will be inconsequential.

Question C:

Even if inflationary pressures rise substantially as a result of quantitative easing and low interest rates, the Federal Reserve has ample tools to rein inflation back in if it chooses to do so.

Question A: Ethanol content requirements and protectionism against imported ethanol (which includes fuel from sugarcane) raise food prices without significantly reducing carbon-dioxide emissions.

Question B: A direct disincentive to emit carbon-dioxide, for example through a carbon tax or an emissions permit market, is more efficient than requiring the use of corn-based ethanol fuels.

Question A: Even if all the official-sector funding that Greece received from 2010 through August 2012 is written off, propping up Greece to buy time for the rest of Europe to prepare for Greek default has been better for citizens of the Eurozone outside of Greece than a policy that would have cut off funding sooner.

Question B: A substantial sovereign-debt default by some combination of Greece, Ireland, Italy, Portugal and Spain is a necessary condition for the euro area as a whole to grow at its pre-crisis trend rate over the next three years.

Question C: Unless there is a substantial default by some combination of Greece, Ireland, Italy, Portugal and Spain on their sovereign debt and commercial bank debt, plus credible reforms to prevent excessive borrowing in the future, the euro area is headed for a costly financial meltdown and a prolonged recession.

The current trade barriers in the U.S. sugar industry raise the profits of sugar producers and make the typical U.S. consumer pay more for sugar and goods that use sugar as an input.

Question A: Loans to students attending for-profit colleges are especially risky because students attending them have had default rates that greatly exceed those for comparable students attending public and non-profit private institutions.

Question B: Rules that tie each college's eligibility for federal student loans to its students' graduation rates and post-schooling employment outcomes would better protect taxpayers from losses on student loans.

Question A: The way in which money market funds normally trade – at one dollar per share, even though the per-share value of the assets backing them varies over time – made them vulnerable to a run in 2008 before they received taxpayer guarantees.

Question B: Taxpayers would be better protected if each money market fund in the U.S. were instead required to trade at its floating net asset value.

Question C: In the absence of floating net asset values, taxpayers would be better protected if each money market fund in the U.S. were required to set aside capital to protect against losses while holding back a portion of shareholders' cash for a time when they seek to withdraw all of their money.

Taxes or bans on large bottles of soft drinks containing sugar are not likely to have a significant effect on obesity rates because people will substitute towards consuming excessive calories in other ways.

Subjecting online sales from out-of-state vendors to the same retail sales taxes imposed on in-state sales would raise more tax revenue in the states making this change while reducing the pro-online bias of current policy.

Consumers would not necessarily be better off if cable and satellite TV firms were required to offer a la carte pricing for individual channels, because the networks' programming charges and the satellite-and-cable fees could adjust in response to this rule.

Long run fiscal sustainability in the U.S. will require cuts in currently promised Medicare and Medicaid benefits and/or tax increases that include higher taxes on households with incomes below $250,000.

Question A:

Assuming that Germany eventually agrees to backstop the debt of southern European countries, the eurozone as a whole will be better off if that bailout is unconditional, rather than accompanied by the labor market reforms and future budget controls that Germany is demanding of countries in return.

Question B: If Germany fails to bail out the southern tier of Europe, its own economy will be hurt more — because of output and asset losses — than it would be by an unconditional bailout.

Question C: The main reason other eurozone countries need to worry about Greek banks losing access to ECB support is because the ensuing chaos in Greece could trigger bank runs in peripheral countries.

Question A: A cut in federal income tax rates in the US right now would lead to higher GDP within five years than without the tax cut.

Question B: A cut in federal income tax rates in the US right now would raise taxable income enough so that the annual total tax revenue would be higher within five years than without the tax cut.

Question A: Trade with China makes most Americans better off because, among other advantages, they can buy goods that are made or assembled more cheaply in China.

Question B: Some Americans who work in the production of competing goods, such as clothing and furniture, are made worse off by trade with China.

An important reason why private college and university tuition has risen faster than the CPI during the past few decades is because competition for faculty members — whose potential earnings in other sectors have steadily improved — has driven up their pay faster than their productivity.

If the fiscal changes that are planned under current US law take place next year — including Bush era tax cuts expiring, Medicare payment rates to doctors being cut, the AMT applying to many more taxpayers, and automatic cuts in defense and non-defense discretionary spending kicking in — then US real GDP growth in 2013 will be lower than it would be under the CBO's alternative fiscal scenario, in which the above changes do not occur.

New technology for fracking natural gas, by lowering energy costs in the United States, will make US industrial firms more cost competitive and thus significantly stimulate the growth of US merchandise exports.

Cuba’s low per-capita income growth — 1.2 percent per year since 1960 —has more to do with Cuba’s own economic policies than with the U.S. embargo on trade and tourism.

Question A: Reducing the minimum retirement age in France from 62 back to age 60, permanently, would reduce long-term French economic growth and substantially raise French debt relative to GDP over time.

Question B: France’s overall employment is higher today because of the 35 hour work week than it would be without a limit on weekly hours.

Connecticut should pass its Senate Bill 60, which states that during a “severe weather event emergency, no person within the chain of distribution of consumer goods and services shall sell or offer to sell consumer goods or services for a price that is unconscionably excessive.”

The former head of the Transportation Security Administration is correct in arguing that randomizing airport “security procedures encountered by passengers (additional upper-torso pat-downs, a thorough bag search, a swab test of carry-ons, etc.), while not subjecting everyone to the full gamut" would make it "much harder for terrorists to learn how to evade security procedures."

Laws that limit the resale of tickets for entertainment and sports events make potential audience members for those events worse off on average.

Prior to the crisis, the benefits from the funding advantage that Fannie Mae and Freddie Mac had by virtue of perceived government support mostly went to their shareholders, rather than into substantially lower interest rates on residential mortgages.

Question A: If public school students had the option of taking the government money (local, state, federal) currently being spent on their own education and turning that money into vouchers that they could use towards covering the costs of any private school or public school of their choice (e.g. charter schools), most would be better off.

Question B: The main drawback to allowing all public school students to take the government money (local, state, federal) currently being spent on their own education and turning that money into vouchers that they could use towards covering the costs of any private school or public school of their choice (e.g. charter schools) would be that some students would not make an active choice and would be left with much worse peers and a weaker school.

Question A: The average size of the 19 financial firms that just completed the Federal Reserve stress tests (i.e. the CCAR) would be substantially smaller if they did not have implicit government support.

Question B: The 19 financial firms that just completed the Federal Reserve stress tests (i.e. the CCAR) are big primarily because of economies of scale and scope, rather than because of implicit government support.

Changes in U.S. gasoline prices over the past 10 years have predominantly been due to market factors rather than U.S. federal economic or energy policies.

Question A: Freer trade improves productive efficiency and offers consumers better choices, and in the long run these gains are much larger than any effects on employment.

Question B: On average, citizens of the U.S. have been better off with the North American Free Trade Agreement than they would have been if the trade rules for the U.S., Canada and Mexico prior to NAFTA had remained in place.

Because the U.S. Treasury bailed out and backstopped banks (by injecting equity into them in late 2008, and later committing to provide public capital to any banks that failed the stress tests and could not raise private capital), the U.S. unemployment rate was lower at the end of 2010 than it would have been without these measures.

Loosening current licensing restrictions on the range of services that nurses, physician assistants, dental hygienists and pharmacists are permitted to perform would help patients on balance, because the additional safety risks would be small compared to the decreased costs in waiting time and fees.

Bans on the short selling of financial securities, such as stocks and government bonds, lead to prices that are further, on average, from their fundamental values.

Question A: Because of the American Recovery and Reinvestment Act of 2009, the U.S. unemployment rate was lower at the end of 2010 than it would have been without the stimulus bill.

Question B:

Taking into account all of the ARRA’s economic consequences — including the economic costs of raising taxes to pay for the spending, its effects on future spending, and any other likely future effects — the benefits of the stimulus will end up exceeding its costs.

Local ordinances that limit rent increases for some rental housing units, such as in New York and San Francisco, have had a positive impact over the past three decades on the amount and quality of broadly affordable rental housing in cities that have used them.

Question A:

The typical chief executive officer of a publicly traded corporation in the U.S. is paid more than his or her marginal contribution to the firm's value.

Question B:

Mandating that U.S. publicly listed corporations must allow shareholders to cast a non-binding vote on executive compensation was a good idea.

One of the leading reasons for rising U.S. income inequality over the past three decades is that technological change has affected workers with some skill sets differently than others.

Question A:

If the US replaced its discretionary monetary policy regime with a gold standard, defining a "dollar" as a specific number of ounces of gold, the price-stability and employment outcomes would be better for the average American.

Question B: There are many factors besides US inflation risk that influence the current dollar price of gold.

In general, using more congestion charges in crowded transportation networks — such as higher tolls during peak travel times in cities, and peak fees for airplane takeoff and landing slots — and using the proceeds to lower other taxes would make citizens on average better off.

A tax on the carbon content of fuels would be a less expensive way to reduce carbon-dioxide emissions than would a collection of policies such as “corporate average fuel economy” requirements for automobiles.

Question A: All else equal, making drugs illegal raises street prices for those drugs because suppliers require extra compensation for the risk of incarceration and other punishments.

Question B: The Netherlands restrictions on “soft drugs” combined with a moderate tax aimed at deterring their consumption would have lower social costs than continuing to prohibit use of those drugs as in the US. (Click here for a summary of the Netherlands restrictions.)

Question A:

Credible assumptions for inflation, GDP growth and primary budget deficits in Italy imply that either the Debt-to-GDP ratio in Italy would increase sharply if Italian interest rates on 10-year government debt remained at the November 30 level of around 7 percent or Italy would lose access to the bond market.

Question B:

Absent outside help to deal with runs, such as a pledge of fiscal support from Germany or an unlimited commitment by the ECB to buy bonds, there is no spending-and-tax plan Italy can announce that would be credible enough to hold its interest rates low enough to stabilize its Debt-to-GDP ratio.

There are no consequential distortions created by the tax preference that favors obtaining health insurance through employers.

Federal mandates that government purchases should be “buy American” unless there are exceptional circumstances, such as in the American Recovery and Reinvestment Act of 2009, have a significant positive impact on U.S. manufacturing employment.

Question A: Eliminating tax deductions for non-investment personal interest expenses (e.g., on mortgages), with reductions in personal tax rates that are both budget neutral and keep the burden of taxes by income group the same, would lead to more efficient financing decisions by individuals.

Question B: Reducing the deductibility of interest expenses for non-financial businesses to equalize the overall tax cost of debt and equity financing, while using the extra revenue to reduce personal and corporate tax rates in a budget neutral fashion that also keeps the burden of taxes the same, would lead to more efficient financing decisions by firms.

Question A: Unless they have inside information, very few investors, if any, can consistently make accurate predictions about whether the price of an individual stock will rise or fall on a given day.

Question B: Plausible expectations of future dividends, discounted using a plausible risk-adjusted interest rate, explain well the level of stock prices for recently listed internet businesses in 1999.

The Chinese government pursues policies that keep the renminbi's exchange rate vis à vis the dollar lower than it would be if the currency floated without those policies.

Public school students would receive a higher quality education if they all had the option of taking the government money (local, state, federal) currently being spent on their own education and turning that money into vouchers that they could use towards covering the costs of any private school or public school of their choice (e.g. charter schools).

Question A: All else equal, permanently raising the federal marginal tax rate on ordinary income by 1 percentage point for those in the top (i.e., currently 35%) tax bracket would increase federal tax revenue over the next 10 years.

Question B:

The cumulative budget shortfalls in the US over the next 10 years can be reduced by half (or more) purely by increasing the federal marginal tax rate on ordinary income for those in the top tax bracket.

All else equal, the Fed's new plan to increase the maturity of its Treasury holdings will boost expected real GDP growth for calendar year 2012 by at least one percentage point.