Tutorial_CHAP15

Tutorial_CHAP15 - CHAPTER 15 Government Debt A PowerPoint...

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Chapter Fifteen 1 ® CHAPTER 15 Government Debt A PowerPoint Tutorial To Accompany MACROECONOMICS, 6th. ed. N. Gregory Mankiw By Mannig J. Simidian
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Chapter Fifteen 2 What is the government debt and the annual budget deficit? Annual Deficit (2007) Annual Deficit (2006) Annual Deficit (2005) Annual Deficit (2004) Annual Deficit (2003) Annual Deficit (2002) The government debt is an accumulation of all past annual deficits. In 2005, the debt of the U.S. federal government was $4.7 trillion. When a government spends more than it collects in taxes, it has a budge deficit, which it finances by borrowing from the private sector.
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Chapter Fifteen 3 When Ronald Reagan because president in 1980, he wanted to reduce taxes and increase military expenditures. These policies, coupled with a deep recession attributable to tight monetary policy, began a long period of subsequent higher budget deficits. The increase in government debt during the 1980s caused concern among policymakers. In response, over the next few years, there were tax increases, spending restraints, and rapid economic growth due to the technology boom, which ultimately, caused the budget deficits to shrink and eventually turn into surpluses.
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4 Modifies the real value of outstanding public debt to reflect current inflation . Subtracts government assets from government debt. Includes hidden liabilities that currently escape detection in the accounting system. Calculates a cyclically-adjusted budget deficit (based on estimates of what government spending and tax revenue would be if the economy were operating at its natural rate of output and employment). The government budget deficit equals government spending minus government revenue, which in turn equals the amount of new debt the government needs to issue to finance its operations. A meaningful deficit…
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Tutorial_CHAP15 - CHAPTER 15 Government Debt A PowerPoint...

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