{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Principles of Economics- Mankiw (5th) 555

Principles of Economics- Mankiw (5th) 555 - CHAPTER 25 S AV...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
CHAPTER 25 SAVING, INVESTMENT, AND THE FINANCIAL SYSTEM 573 Congress would be tempted to spend the surplus on “pork barrel” projects of dubious value. As this book was going to press, the debate over the budget surplus was still raging. There is room for reasonable people to disagree. The right policy depends on how valuable you view private investment, how valuable you view public investment, how distortionary you view taxation, and how reliable you view the political process. CASE STUDY THE HISTORY OF U.S. GOVERNMENT DEBT How indebted is the U.S. government? The answer to this question varies sub- stantially over time. Figure 25-5 shows the debt of the U.S. federal government expressed as a percentage of U.S. GDP. It shows that the government debt has fluctuated from zero in 1836 to 107 percent of GDP in 1945. In recent years, gov- ernment debt has been about 50 percent of GDP. The behavior of the debt–GDP ratio is one gauge of what’s happening with the government’s finances. Because GDP is a rough measure of the govern-
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.
  • Spring '10
  • abijian
  • President of the United States, United States Congress, Federal government of the United States, Washington, D.C., U.S. federal government

{[ snackBarMessage ]}

Ask a homework question - tutors are online