hw2 answers - 1. a. Total Surplus or

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Unformatted text preview: 1. a. Total Surplus or Deficit(−)-35.0-30.0-25.0-20.0-15.0-10.0-5.0 0.0 5.0 10.0 1 9 4 Key Points to note in answering the question: (1) Only a very SLIGHT surplus is projected for 2012 and 2013. (2) Incentives of President to show "good" forecast (3) Impact of unexpected events (such as a recession) Assignment # 2 Solutions 1.a. 1.b. Gross Federal Debt as % of GDP 0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0 1 9 4 1 9 4 3 1 9 4 6 1 9 4 9 1 9 5 2 1 9 5 5 1 9 5 8 1 9 6 1 1 9 6 4 1 9 6 7 1 9 7 1 9 7 3 1 9 7 6 1 9 7 8 1 9 8 1 1 9 8 4 1 9 8 7 1 9 9 1 9 9 3 1 9 9 6 1 9 9 9 2 2 2 5 2 8 e s t i m a t e 2 1 1 e s t i m a t e Key talking points for answer to question (1) Note dept as a %of GDP is decreasing in last 3 years projected (2011-2013) (2) Budget surplus was only project as a slight positive for 2012- 2013 (3) Need an assumption about Y--> does GDP increase enough so that dept as a % of GDP decreases even in 2011 when there is no surplus? (4) Role of unexpected events (such as recession) Expenditures as a % of GDP 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 1 9 4 8 1 9 5 1 1 9 5 4 1 9 5 7 1 9 6 1 9 6 3 1 9 6 6 1 9 6 9 1 9 7 2 1 9 7 5 1 9 7 7 1 9 8 1 9 8 3 1 9 8 6 1 9 8 9 1 9 9 2 1 9 9 5 1 9 9 8 2 1 2 4 2 7 Social Security and Medicare Defense and International...
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This note was uploaded on 04/30/2008 for the course AIM 2301 taught by Professor Muslu during the Spring '08 term at University of Texas at Dallas, Richardson.

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hw2 answers - 1. a. Total Surplus or

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