Largest category was health care social services and

largest category was health care, social services and education then transportation and •
housing
largest tax cuts was individual then infrastructure •
the changes were made to be temporary •

The actual movements in RGDP and employment is hard to measure just from the stimulus alone. •
CBO tried to measure it. They determined it helped but only by a small amount. Without ARRA
reduced unemployment from 11.4 to 10% but that was all
increased government debt made the deficit worse and hurt us more during recession •
Keynesian theory
John Keynes argued the government purchase multiplier might be greater then 10. (it is now •
proved to be less then 2)
They also developed the tax multiplier •
declares fiscal policy is necessary •
deficit, surplus, and debt
when we say deficit we mean money against revenue lost in one year, while debt is all money •
owed
budget deficit the situation where the government expenditure are greater then tax revenue •
budget surplus the situation where the government expenditure are less then tax revenue •
we are usually in deficit (except for 2001) •
cyclically adjusted budget deficit or surplus means the deficit or surplus in the fed government •
budget if the economy were at potential GDP
when GDP is above potential more taxes are paid and there are lower transfer payments causing •
total spending to rise less then it would have reducing too high inflation
few believe the government should balance there budget every year , they would have to mess •
with taxes every year
some economists agree that a deficit is normal, if it is over long run bills because we should take •
a while to pay for a house for example
every time the federal government runs a budget deficit the treasury must borrow funds from •
investors by selling treasury securities
Budget deficit = (T- G) < 0 •
Budget surplus = (T-G) > 0 •
Debt= sum of deficit + surplus •
Is the national debt a problem
Total value of US treasury bond outstanding is called the federal government debt or national •
debt
If debt is high you will have to cut back •
ultimately the government can raise through taxes what it needs to make up debt interest •
payments but if that gets to high it can hurt consumption and RGDP
Interest payment is currently at 11% which the federal expenditure which is "good" •
if some of the debt was brought about through infrastructure such as bridges or education it can •
help the economy in the end
the government just needs to watch out for the size of GDP relative to the interest rate. This is •
way problems can occur