Explanation Government spending is the expenditures made by the government for various purposes in the economy. There are government expenditures for the production process, for the operation of the government operated firms in the economy, and so on. Thus, the total expenditure made by the government for the society is known as the government spending or government expenditures, which is an important component of the aggregate demand of the economy. The government expenditure is made out of the government revenue in the economy. The main sources of the government revenue include taxes and fines, and profits and revenues from the public sector offices as well as from the firms in the economy. The estimation of the government revenue receipts and the expenditures for the coming year is known as the budget of the government. Option (b): When the government budget becomes a deficit budget, it leads the government to depend on debt for deficit financing. This means that whenever the federal government budget faces the deficit, treasury depends on the sale of the government securities to the public for financing the deficit. Thus, it is known as national debt in which the debt is owed to the other US citizens. Thus, in future, the government has to repay the government security holders, which means that there will be a future redistribution of income and wealth in favor of the bondholders when the national debt is raised. Therefore, option 'b' is the correct answer. Option (a): The treasury sells the government securities such as treasury bonds to the public for gathering the funds required for deficit budget...

The owning of national debt and the impact in future.

MACROECONOMICS FOR TODAY

10th Edition

ISBN: 9781337613057

Author: Tucker

Publisher: CENGAGE L

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Question

Chapter 13, Problem 6SQ

To determine

The owning of national debt and the impact in future.

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Similar questions

A government starts off with a total debt of $3.5 billion. In year one, the government runs a deficit of 400 million. In year two, the government runs a deficit of 1 billion. In year three, the government runs a surplus of 200 million. What is the total debt of the government at the end of year three?
Debt has a certain self-reinforcing quality to it. There is one category of government spending that automatically Increases along with the federal debt. What Is It?
Describe how a plan for reducing the government deficit might affect a college student, a young professional, and a middle-income family.

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