201C12ol - CHAPTER 12 DEFICITS, SURPLUSES AND DEBT -How do...

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CHAPTER 12 – DEFICITS, SURPLUSES AND DEBT -How do deficits and surpluses arise? -What harm/good, if any, do deficits/surpluses cause? -Who will pay off the national debt? -Fiscal Stimulus: increased gov’t spending, tax cuts, increase transfers--to eliminate unemployment -Fiscal Restraint: less gov’t spending, tax hikes, reduced transfers--to keep inflation under control -Deficit Spending: the gov’t borrows funds to pay for spending that exceeds tax revenues -Budget Deficit: Amount by which gov’t spending exceeds gov’t revenue in a given time period -How does the gov’t spend more than it has in revenue? -the Treasury Department borrows needed funds from the private sector or from the banking system by selling bonds (IOUs)--these tell how much has been borrowed, the interest rate, and when the debt (bond) is to be repaid -A String of Deficits (T-71): shows there has been an upward (increasing) trend in the size of the deficit since 1979 with wider fluctuations; then in 1993 it turned and became less
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This note was uploaded on 02/22/2011 for the course ECON 201 taught by Professor Hickman during the Spring '11 term at Frederick Community College.

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201C12ol - CHAPTER 12 DEFICITS, SURPLUSES AND DEBT -How do...

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