MACRO Exam 3 Take-Home Portion

MACRO Exam 3 Take-Home Portion - MACRO / Summer 2010 / Exam...

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Unformatted text preview: MACRO / Summer 2010 / Exam 3 / Take-Home Portion First Name Anna Last NameMbamalu Answer the following 8 questions and hand in your typed responses. You can hit the space bar to give yourself room to answer. The link to the CBO report and the US Debt Clock are at web links at mslind.pageout.net. Hand in this portion of the exam at the beginning of the exam. Staple pages! Questions from the CBO Report: Federal Debt and the Risk of a Fiscal Crisis (15% of Exam Grade) *Note: Germanys bonds are considered safe and are used as a benchmark for low risk. 1. What does the report say could push the federal debt-to-GDP ratios higher in the future if current policies are not changed? The aging of the population and rising costs for health care will push federal spending, measured as a percentage of GDP, well above the levels experienced in recent decades. 2. What are the consequences of a persistent high federal debt-to-GDP ratio which might arise gradually? More people would like to contribute to the govt debt instead of investing in capital this would inturn lead to lower output and incomes.inturn lead to lower output and incomes....
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This note was uploaded on 08/02/2011 for the course ECON 2305 taught by Professor Wunder during the Spring '08 term at UT Arlington.

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MACRO Exam 3 Take-Home Portion - MACRO / Summer 2010 / Exam...

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