Causes of government budget deficits and meaning of public debt. Concept: Budget deficits: It occurs when the government’s expenditure exceeds its estimated revenue. Public Debt: It is also called as government debt. It represents the total outstanding liability of a country’s federal government. It arises when the government borrows money to finance their expenditures (when tax revenues aren’t high enough).

Question

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Answer 1

Question

Chapter 14, Problem 14.1LO

To determine

Causes of government budget deficits and meaning of public debt.

Concept:

Budget deficits: It occurs when the government’s expenditure exceeds its estimated revenue.

Public Debt: It is also called as government debt. It represents the total outstanding liability of a country’s federal government. It arises when the government borrows money to finance their expenditures (when tax revenues aren’t high enough).

Expert Solution & Answer

Explanation of Solution

The federal government budget deficits occur because of the following reasons:

(a) High spending and low taxes: The government can face budget deficit if they are spending too much and/or keeping the taxes low. This would lead to a deficit on government budget. Sometimes the government spends more and levy lower taxes in order to gain popularity and votes.

(b) High level of tax avoidance or tax evasion: Most of the time people and businessmen takes advantage of tax loop holes and don’t pay the taxes. The governments in some countries are less effective. So, the tax collection drops and causes to a budget deficit.

(c) Demographic pressure: If the country has ageing population, then government spending will be more on the state pension and their health care facility. The tax rate will also be low. While, a fast growing population will also put more pressure on the government to fund essential public and merit goods.

(d) Fundamental macroeconomics shifts: In the time of recession, the government has to spend more and decrease the tax rate in order to boost aggregate demand. This also causes to a government budget deficit.

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Students have asked these similar questions

Tasks Exercise 1 Assess the following functions: 1. f(x)= x2+6x+2 2.f '(x)=10x-2x2+5 a. Find the stationary points. (5 marks) b. Determine whether the stationary point is a maximum or minimum. (5 marks) c. Draw the corresponding curves (5 marks)

Problem 2: The sales data over the last 10 years for the Acme Hardware Store are as follows: 2003 $230,000 2008 $526,000 2004 276,000 2009 605,000 2005 328,000 2010 690,000 2006 388,000 2011 779,000 2007 453,000 2012 873,000 1. Calculate the compound growth rate for the period of 2003 to 2012. 2. Based on your answer to part a, forecast sales for both 2013 and 2014. 3. Now calculate the compound growth rate for the period of 2007 to 2012. 1. Based on your answer to part e, forecast sales for both 2013 and 2014. 5. What is the major reason for the differences in your answers to parts b and d? If you were to make your own projections, what would you forecast? (Drawing a graph is very helpful.)

Exercise 4A firm has the following average cost: AC = 200 + 2Q – 36 Q Find the stationary point and determine if it is a maximum or a minimum.b. Find the marginal cost function.

Answer 2

Question

Chapter 14, Problem 14.1LO

To determine

Causes of government budget deficits and meaning of public debt.

Concept:

Budget deficits: It occurs when the government’s expenditure exceeds its estimated revenue.

Public Debt: It is also called as government debt. It represents the total outstanding liability of a country’s federal government. It arises when the government borrows money to finance their expenditures (when tax revenues aren’t high enough).

Expert Solution & Answer

Explanation of Solution

The federal government budget deficits occur because of the following reasons:

(a) High spending and low taxes: The government can face budget deficit if they are spending too much and/or keeping the taxes low. This would lead to a deficit on government budget. Sometimes the government spends more and levy lower taxes in order to gain popularity and votes.

(b) High level of tax avoidance or tax evasion: Most of the time people and businessmen takes advantage of tax loop holes and don’t pay the taxes. The governments in some countries are less effective. So, the tax collection drops and causes to a budget deficit.

(c) Demographic pressure: If the country has ageing population, then government spending will be more on the state pension and their health care facility. The tax rate will also be low. While, a fast growing population will also put more pressure on the government to fund essential public and merit goods.

(d) Fundamental macroeconomics shifts: In the time of recession, the government has to spend more and decrease the tax rate in order to boost aggregate demand. This also causes to a government budget deficit.

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Answer 3

Question

Chapter 14, Problem 14.1LO

To determine

Causes of government budget deficits and meaning of public debt.

Concept:

Budget deficits: It occurs when the government’s expenditure exceeds its estimated revenue.

Public Debt: It is also called as government debt. It represents the total outstanding liability of a country’s federal government. It arises when the government borrows money to finance their expenditures (when tax revenues aren’t high enough).

Expert Solution & Answer

Explanation of Solution

The federal government budget deficits occur because of the following reasons:

(a) High spending and low taxes: The government can face budget deficit if they are spending too much and/or keeping the taxes low. This would lead to a deficit on government budget. Sometimes the government spends more and levy lower taxes in order to gain popularity and votes.

(b) High level of tax avoidance or tax evasion: Most of the time people and businessmen takes advantage of tax loop holes and don’t pay the taxes. The governments in some countries are less effective. So, the tax collection drops and causes to a budget deficit.

(c) Demographic pressure: If the country has ageing population, then government spending will be more on the state pension and their health care facility. The tax rate will also be low. While, a fast growing population will also put more pressure on the government to fund essential public and merit goods.

(d) Fundamental macroeconomics shifts: In the time of recession, the government has to spend more and decrease the tax rate in order to boost aggregate demand. This also causes to a government budget deficit.

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Answer 4

Question

Chapter 14, Problem 14.1LO

To determine

Causes of government budget deficits and meaning of public debt.

Concept:

Budget deficits: It occurs when the government’s expenditure exceeds its estimated revenue.

Public Debt: It is also called as government debt. It represents the total outstanding liability of a country’s federal government. It arises when the government borrows money to finance their expenditures (when tax revenues aren’t high enough).

Expert Solution & Answer

Explanation of Solution

The federal government budget deficits occur because of the following reasons:

(a) High spending and low taxes: The government can face budget deficit if they are spending too much and/or keeping the taxes low. This would lead to a deficit on government budget. Sometimes the government spends more and levy lower taxes in order to gain popularity and votes.

(b) High level of tax avoidance or tax evasion: Most of the time people and businessmen takes advantage of tax loop holes and don’t pay the taxes. The governments in some countries are less effective. So, the tax collection drops and causes to a budget deficit.

(c) Demographic pressure: If the country has ageing population, then government spending will be more on the state pension and their health care facility. The tax rate will also be low. While, a fast growing population will also put more pressure on the government to fund essential public and merit goods.

(d) Fundamental macroeconomics shifts: In the time of recession, the government has to spend more and decrease the tax rate in order to boost aggregate demand. This also causes to a government budget deficit.

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Answer 5

Chapter 14, Problem 14.1LO

To determine

Causes of government budget deficits and meaning of public debt.

Concept:

Budget deficits: It occurs when the government’s expenditure exceeds its estimated revenue.

Public Debt: It is also called as government debt. It represents the total outstanding liability of a country’s federal government. It arises when the government borrows money to finance their expenditures (when tax revenues aren’t high enough).

Expert Solution & Answer

Explanation of Solution

The federal government budget deficits occur because of the following reasons:

(a) High spending and low taxes: The government can face budget deficit if they are spending too much and/or keeping the taxes low. This would lead to a deficit on government budget. Sometimes the government spends more and levy lower taxes in order to gain popularity and votes.

(b) High level of tax avoidance or tax evasion: Most of the time people and businessmen takes advantage of tax loop holes and don’t pay the taxes. The governments in some countries are less effective. So, the tax collection drops and causes to a budget deficit.

(c) Demographic pressure: If the country has ageing population, then government spending will be more on the state pension and their health care facility. The tax rate will also be low. While, a fast growing population will also put more pressure on the government to fund essential public and merit goods.

(d) Fundamental macroeconomics shifts: In the time of recession, the government has to spend more and decrease the tax rate in order to boost aggregate demand. This also causes to a government budget deficit.

Answer 6

Chapter 14, Problem 14.1LO

To determine

Causes of government budget deficits and meaning of public debt.

Concept:

Budget deficits: It occurs when the government’s expenditure exceeds its estimated revenue.

Public Debt: It is also called as government debt. It represents the total outstanding liability of a country’s federal government. It arises when the government borrows money to finance their expenditures (when tax revenues aren’t high enough).

Expert Solution & Answer

Explanation of Solution

The federal government budget deficits occur because of the following reasons:

(a) High spending and low taxes: The government can face budget deficit if they are spending too much and/or keeping the taxes low. This would lead to a deficit on government budget. Sometimes the government spends more and levy lower taxes in order to gain popularity and votes.

(b) High level of tax avoidance or tax evasion: Most of the time people and businessmen takes advantage of tax loop holes and don’t pay the taxes. The governments in some countries are less effective. So, the tax collection drops and causes to a budget deficit.

(c) Demographic pressure: If the country has ageing population, then government spending will be more on the state pension and their health care facility. The tax rate will also be low. While, a fast growing population will also put more pressure on the government to fund essential public and merit goods.

(d) Fundamental macroeconomics shifts: In the time of recession, the government has to spend more and decrease the tax rate in order to boost aggregate demand. This also causes to a government budget deficit.

Answer 7

Chapter 14, Problem 14.1LO

To determine

Causes of government budget deficits and meaning of public debt.

Concept:

Budget deficits: It occurs when the government’s expenditure exceeds its estimated revenue.

Public Debt: It is also called as government debt. It represents the total outstanding liability of a country’s federal government. It arises when the government borrows money to finance their expenditures (when tax revenues aren’t high enough).

Answer 8

Expert Solution & Answer

Explanation of Solution

The federal government budget deficits occur because of the following reasons:

(a) High spending and low taxes: The government can face budget deficit if they are spending too much and/or keeping the taxes low. This would lead to a deficit on government budget. Sometimes the government spends more and levy lower taxes in order to gain popularity and votes.

(b) High level of tax avoidance or tax evasion: Most of the time people and businessmen takes advantage of tax loop holes and don’t pay the taxes. The governments in some countries are less effective. So, the tax collection drops and causes to a budget deficit.

(c) Demographic pressure: If the country has ageing population, then government spending will be more on the state pension and their health care facility. The tax rate will also be low. While, a fast growing population will also put more pressure on the government to fund essential public and merit goods.

(d) Fundamental macroeconomics shifts: In the time of recession, the government has to spend more and decrease the tax rate in order to boost aggregate demand. This also causes to a government budget deficit.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Ch. 14 - Prob. 14.1LO Ch. 14 - Prob. 14.2LO Ch. 14 - Prob. 14.3LO Ch. 14 - Prob. 14.4LO Ch. 14 - Prob. 14.1SC Ch. 14 - Prob. 14.2SC Ch. 14 - Prob. 14.3SC Ch. 14 - Prob. 14.4SC Ch. 14 - Prob. 1CTQ Ch. 14 - Prob. 2CTQ

Explanation of Solution

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Chapter 14 Solutions