Menu_04_May_11 - that they are finite—income stream...

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TODAY’S MENU: Wednesday 04 May 2011 I. BUSINESS A. Practice Problems 1. Chapter 34: 1, 3-5, 8-10, 12, 13, 15 B. Final exam: One week from tomorrow (12 May, 10:00 AM-12:00 PM) in Cox Auditorium C. Pre-final Office Hours 1. This week: as per usual 2. Next week a. Monday, 09 May, 10:15 AM-12:45 PM b. Tuesday, 10 May, 7:00 AM-12:00 PM II. SUBSTANCE A. Federal budget deficits and the national debt Need to look at what can be changed and what cant (structural or passive) 1. Opening salvo 2. Definitions a. Budget deficit b. National debt -burden children -have to pay debt at some point of time -half of it the government owes -defference between government and family -when borrow we are getting a promise (get dollars in future; part of future income to lender) part of problem for family is
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Unformatted text preview: that they are finite—income stream eventually will stop-government income stream is infinite-infinate income horizion they have an infinite horizon to make payments—thus they will never have to pay back c. Structural and passive deficits d. Real and nominal deficits-most important-real deficit= nom deficit – national debt (rate of inflation x national debt)-to get rid of= low rate (BAD—ruin economy) 3. Financing deficits-US government borrows bonds-buys bond=lending -retirement (asset) relative, risk free—safest asset to have (security) 4. And future generations a. Myths b. Realities-MUST make payment 5. And economic policy a. Monetary b. Fiscal 6. Conclusions THE END...
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Menu_04_May_11 - that they are finite—income stream...

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