MACROECONOMICS
14th Edition
ISBN: 9781337794985
Author: Baumol
Publisher: CENGAGE L
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Question
Chapter 11.B, Problem 3TY
a)
To determine
To describe:The equilibrium GDP and budget deficit.
b)
To determine
To describe: The changed observed in the GDP and budget deficit.
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If you were the Prime Minister of Malaysia, what would you do to reduce the fiscal deficit of the country? Explain in detail.
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.
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c) The government’s debt is relatively low, but the government is running a budget deficit to finance the interest payments on the debt.
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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.
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