Chapter 34 Deficits and Debts

Chapter 34 Deficits and Debts - Chapter 34 Deficits and...

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Chapter 34 Deficits and Debts When ever possible, run surpluses, or at least a balanced budget, to help stimulate long run growth Deficit is a shortfall of revenues under payments Surplus is an excess of revenues over payments Whenever government runs deficit, has to finance it by selling bonds Printing too much money can cause inflation problems – last resort Many ways to measure expenditures and receipts so there are many ways to measure deficits and surpluses Deficit and surplus figures are simply summary measure of the financial health of the economy. To understand the summary must understand the methods that were used to calculate it Would economy have a budget deficit if it were at its potential level of income o Structural deficit the part of a budget deficit that would exist even if economy were at its potential level of income o passive deficit the part of the deficit that exists because economy is operating below its potential level of income
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Chapter 34 Deficits and Debts - Chapter 34 Deficits and...

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