Documents - GOVERNMENT BORROWING LESSON: BE A BUDGET HERO:...

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GOVERNMENT BORROWING LESSON: BE A BUDGET HERO : STUDENT HANDOUT Note to Students : Review the following information, play the simulation online, then answer the questions at the end of this handout concerning the choices you made and the results of the simulation. Lesson Background: Spending is part of fiscal policy. If you spend more than you have in your budget, it creates what is called a budget deficit. Total debt or surplus is the addition of the budget deficit or surplus from preceding years plus interest owed to anyone that is financing that debt. A trade-off involves giving up something in order to gain something else in return, as well as understanding the upside and downside to the choices that were made. Governments generate revenues to cover budgetary obligations through taxation. If tax income does not generate enough money to cover spending, governments need to borrow. This borrowing comes in the forms of bonds. Deficit spending can help minimize or end a recession. However, if a government has too much
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This note was uploaded on 04/18/2011 for the course ECON 1101 taught by Professor Rappoport during the Spring '08 term at Temple.

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Documents - GOVERNMENT BORROWING LESSON: BE A BUDGET HERO:...

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