In the charter of the EU central bank all member countries are required to keep their fiscal deficits below a certain level. This is because all statements are relevant. O it is not fair to tax other countries through inflation tax to finance one country's spending. Okeeping a low fiscal deficit is a commitment to low inflation rate. all governments have incentive to pay their bills by printing more money.

In the charter of the EU central bank all member countries are required to keep their fiscal deficits below a certain level. This is because all statements are relevant. O it is not fair to tax other countries through inflation tax to finance one country's spending. Okeeping a low fiscal deficit is a commitment to low inflation rate. all governments have incentive to pay their bills by printing more money.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter31: The Impacts Of Government Borrowing

Section: Chapter Questions

Problem 18CTQ: The U.S. government has shut down a number of times In recent history Explain how a government...

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The U.S. government has shut down a number of times In recent history Explain how a government shutdown will affect the variables In the national Investment and savings identity Could the shutdown affect the government budget deficit?
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Excuse me, Dr. Tax, but that position makes little sense. First of all, let me say that this administration’s tax cuts and spending cuts have been and are grossly unfair. The tax cuts have favored the rich, and the spending cuts have reduced programs that help maintain economic security for Americans with low incomes. The present deficit-and the deficits projected for the future-are so large that they threaten our recovery from the recession. Here’s why: All deficits must be paid for by government borrowing, and because the government is borrowing so much money, there is less available for consumers and businesses. With government borrowing now threatening to increase, interest rates will rise and this will reduce spending for houses and cars and, in fact, spending on anything bought with a loan, as well as a business investment that must be financed by borrowing. In other words, some important private borrowing will be crowded out. Sometime next year, the recovery will therefore…
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