Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Question
Chapter 29, Problem 2.1P
To determine
Impact of balanced budget philosophy.
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Congress recently passed and President Biden signed the American Rescue Plan (ARP), which will add $1.9 trillion to the federal deficit over the next ten years. Even before this new spending, federal debt held by the public was slated to reach 107% of GDP by 2031, the highest in history. What do high deficits mean going forward?
Government expenditures and the assessment of taxes is an issue that goes back to the origins of the United States. Why do legislators and other politicians choose to spend so much money? What is the federal deficit and how is it different from the national debt? What has happened recently to federal deficits and the national debt, and what are some risks associated with persistently high deficits and a large national debt?
Define the budget deficit.
Chapter 29 Solutions
Principles of Economics (12th Edition)
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- 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_forwardThe Effects of Fiscal Deficits on an Economy.arrow_forwardThe U.S. government's debt is currently about $20 trillion, which is 105% of GDP. How much debt is too much debt for our country?arrow_forward
- How and why would joint budget resolutions be effective at influencing budget reforms and reducing deficits?arrow_forwardWhat are some fiscal policy measures that can be enacted by the legislative and executive branches of the Federal Government in order to deal with inflationary/recessionary gaps? What is the difference between Federal deficits and the National Debt? Who holds the National Debt? Has the National Debt been growing or declining over time?arrow_forwardLook into the current level of the national debt and the federal deficit in the U.S. Pick any government program and research how much the U.S. spends on it. Does the amount surprise you? What might happen if the budget for the program were increased or reduced? Should the current deficit and debt be cut down? What would be some pros and cons of reducing them?arrow_forward
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