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Suppose you are the economic policy adviser to the president and are asked what should be done to eliminate a federal deficit. What would you recommend?
Economics For Today
Solutions
Economics For Today
Suppose you are the economic policy adviser to the president and are asked what should be done to eliminate a federal deficit. What would you recommend?
Economic policy to eliminate the federal deficit.
Explanation of Solution
The budget deficit occurs when the government expenditures are higher than the government revenues. When there is a federal budget deficit, it will be financed with the borrowings from the government securities. The government securities include the Treasury bills, Treasury notes, and the Treasury bonds. Thus, the Treasury would depend on the sale of all these government securities in order to raise the money for financing the budget deficit.
This policy cannot be always accepted because the government budget deficit would be present because of various reasons...
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