Principles of Macroeconomics (11th Edition)
11th Edition
ISBN: 9780133023671
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Question
Chapter 17, Problem 7P
To determine
The role of budget deficit in the growth rate of the economy.
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what are the conventional and unconverntional ways to reduce a deficit and what are the related problems that could arise with these measures?
Answer the following questions: As you know, the US government has been running budget deficits for several years now. In your opinion, and based on economic reasoning, what will happen to the US economy if the US Federal Government continues to run annual budget deficits for the next decade. Will the economy survive that? Will the economy grow? Will it grow as fast as it could? Will the deficits cause the economy to grow faster? Will it grow at all? These are some of the questions you might address in your primary post.
If tax cuts don't cause enough economic growth, we might also need to reduce expenditures to reduce the deficit. Explain?
Chapter 17 Solutions
Principles of Macroeconomics (11th Edition)
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- For each of the following, indicate which type of government spending would justify a budget deficit and which would not. Increased federal spending on Medicare Increased spending on education Increased spending on the space program Increased spending on airports and air traffic controlarrow_forwardAnalyze the challenges that the US economy is facing to reduce the deficitarrow_forwardWhen are larger deficits desirable?arrow_forward
- Would you please explain carefully several financial sources how the government financing its expenditure and the policy in order to close its deficit?arrow_forwardWhy did the budget surpluses in 2000 and 2001 give way to a series of budget deficits beginning in 2002? Why did those deficits increase substantially beginning in 2008?arrow_forwardIs it a good policy for the government to create budget deficit? Why and why not?arrow_forward
- Conventional ways to reduce the deficit and the related problems. Unconventional ways to reduce the deficit and the related problems. Please explain these as soon as possible pleasearrow_forwardIf you were the Prime Minister of Malaysia, what would you do to reduce the fiscal deficit of the country? Explain in detail.arrow_forwardWhich statement best explains why budget deficits may bring on a recession? a) Large deficits increase interest rates, attracting foreign investors. b) Persistent deficits lead to economic problems that scare away foreign investors. c) Spiraling national debt depresses private saving, reducing the amount of capital that can be invested. d) Deficit spending leads to a reduction in aggregate demand and a decrease in output.arrow_forward
- In which of the following cases does the size of the government’s debt and deficit indicate potential problems for the economy? Explain your answer. a) The government’s debt is relatively low, but the government is running a large budget deficit as it builds a high-speed rail system to connect the major cities of the nation. b) The government’s debt is relatively high due to a recently ended deficit-financed war, but the government is now running only a small budget deficit. c) The government’s debt is relatively low, but the government is running a budget deficit to finance the interest payments on the debt. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forwardExplain how, for a country with a high debt ratio, if the financial markets fear that the country will default on its debt this fear may be self-fulfillingarrow_forwardSketch a diagram of how sustained budget deficits cause low economic growth.arrow_forward
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