National Debt

National Debt - Fiscal Year 2010 6 The Budget Deficit =...

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PRINCIPLES OF MACROECONOMICS THE NATIONAL DEBT Or What on earth is going on and just how bad is it? Foster
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WHAT’S GOING ON IN GREECE AND COULD IT HAPPEN TO US?
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Stability and Growth Pact In 1999 a group of European nations adopted a common currency, the euro, to replace their national currencies. The “stability pact” required each government to keep its budget deficit below 3% of the country’s GDP and a national debt lower than 60% of GDP or face fines. In 2002, both France and Germany were experiencing rising unemployment and also running budget deficits in excess of 3% of GDP. In March 2005 the stability pact was rewritten to allow “small and temporary” breaches of the 3% limit.
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4 “How Long Can the World’s Biggest Borrower be the World’s Largest Power?” Larry Summers
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The Budget of the United States:
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Unformatted text preview: Fiscal Year 2010 6 The Budget Deficit = $1.35 trillion Difference between federal tax revenues and expenditures. It is about 10% of GDP. Should the Budget Be Balanced? A balanced budget every year would undermine the role of taxes and transfers as automatic stabilizers. Yet rules setting an upper limit on deficits are necessary. Since 1970, the U.S. government has managed to have a budget surplus only from 1998 to 2001. All other years brought a deficit. A Look at the Federal Budget Total Deficit or Surplus as a % of GDP The budget deficit as a percentage of GDP tends to rise during recessions (indicated by shaded areas) and fall during expansions. The Budget Balance The budget deficit as a percentage of GDP moves closely in tandem with the unemployment rate....
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This note was uploaded on 02/28/2011 for the course ECON 011 taught by Professor Yezer during the Spring '07 term at GWU.

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National Debt - Fiscal Year 2010 6 The Budget Deficit =...

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