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Macro 13
- 2. Macroeconomics Lecture 13 Fiscal Policy Deficits and Debt
- 3. Questions
- 6. P2 P3 Price Level Real GDP orY Modern Keynes Model 18 Long Run Aggregate Supply Short Run Aggregate Supply 19 P1 Aggregate Demand 17 Unemployment Inflation Recession
- 7. Time Lags Do you really know? Congress approve Effect lag Take 1- 3 years Counterproductive
- 8. Multiplier May not be as large as Keynes calculated
- 10. Automatic Stabilizers Smooth out highs and lows Taxes Unemployment Insurance
- 11. Automatic Stabilizers Job Unemployed Job Taxes Insurance Taxes
- 12. Deficits and Debt Government Spending and Revenue
- 17. Balanced Budget Spending exactly equals revenues
- 18. 0.00% 0.75% 1.50% 2.25% 3.00% 3 month 6 month 12 month 2 year 5 year 10 year 30 year TreasuryYields
- 23. Debt $15 trillion $45,455 per person
- 25. Why would you want government to go into debt? Don’t have to pay Future larger economy
- 26. Debt Investment Only if the return is higher than the interest rate
- 27. Debt Investment Only if the return is higher than the interest rate
- 28. How to reduce deficits Higher taxes Lower spending
- 29. Entitlements Guaranteed benefits 1960 - 20% 2017 - 60%
- 30. Entitlements Guaranteed benefits 1960 - 20% 2017 - 60%
- 31. Interest Expense $240 billion 2.0% current rate 6.2% historical 1962-2017
- 33. Solution to Debt Economic Growth