Chapter16 - CHAPTER16 GovernmentDebtandBudgetDeficits...

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Chapter Sixteen 1 CHAPTER 16 Government Debt and Budget Deficits ® A PowerPoint Tutorial To Accompany   MACROECONOMICS, 7th. Edition N. Gregory Mankiw Tutorial written by: Mannig J. Simidian B.A. in Economics with Distinction, Duke University  M.P.A., Harvard University Kennedy School of Government M.B.A., Massachusetts Institute of Technology (MIT) Sloan School of Management
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Chapter Sixteen 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 Sixteen 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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Chapter Sixteen 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
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This note was uploaded on 02/15/2011 for the course ECON 303 taught by Professor Hasan during the Spring '09 term at Rutgers.

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Chapter16 - CHAPTER16 GovernmentDebtandBudgetDeficits...

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