Like any economic crisis, unemployment rises, aggregate income falls, and tax collections drop during the Great Recession. While unemployment rises, safety net spending rises. To stabilize the economy, the government appears to have just two options: harsh austerity (reduce spending) or more borrowing. It is difficult to defend cuts in federal government programs, especially those that provide a minimum standard of living for the poor, but increasing indebtedness hurts the economy. In a few words, analyze Costs of eliminating the budget deficit solely through (1) personal tax increases, and/or (2) through spending cut by decreasing in transfer payments (i.e., Social Security, Medicare and Medicaid) and in discretionary spending (such as defense and education budgets)
Like any economic crisis,
Financial market:
It is a market where there is buying and selling of financial securities. It includes bonds, equity, all monetary transactions, and currencies. It is a link between investors and capital holders.
Financial instrument includes bills of exchange. It is a written document, signed by the maker to pay a certain amount.
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