Assignment On Government And Budget Depitment

1363 Words6 Pages
ECON 2301- Writing Assignment
Malmi Senaweera

2). According to the two graphs above, the federal budget deficit and the budget deficit as a percentage of GDP shows that the government has been running with deficits for the most part of last twenty years. The graph shows a budget surplus from 1998-2001, but from 2002 to present year it shows a budget deficit. The deficit has been the largest in 2009 due to the Great Recession and the graph shows significant improvements in the recent years.

4). The U.S. national debt graph illustrated above shows the increase of the national debt over the last twenty years. There shows no significant change from 1996-2001. The debt rate has since gradually increased and after the Great Recession in 2009 it has been in an onward strike. The U.S. national debt as a percentage of GDP graph shows a downward trend from 1996-2001, but has increased gradually over time. Even though the graph shows a drop in 2015, it has risen by the next year.
5). When the government revenue is higher than government spending there is a surplus, but when government spending is higher than revenue it is called a deficit. That is how a budget deficit comes into existence. To deal with a budget deficit the administration can cut down on its expenditures and/or increase revenue generating activities like collecting more taxes. (class textbook)
6). When government spending and borrowing results in the increase of interest rates and reduces business

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