This document discusses key aspects of fiscal policy and the federal budget in the United States. It begins by defining the federal budget and its two main purposes of financing government activities and achieving macroeconomic goals. It then explains how fiscal policy uses changes in government spending and taxes to influence aggregate demand and achieve full employment, inflation control, and economic growth. The document also discusses the effects of expansionary and contractionary fiscal policy, discretionary versus built-in (automatic) fiscal policy, and how to evaluate the stance of fiscal policy using cyclically adjusted budget deficits and surpluses.
concepts of NATIONAL INCOME, GROSS DOMESTIC PRODUCT, GNP. NET INCOME, PER CAPTA INCOME, CALCULATION OF NATIONAL INCOME AT CURRENT RATE & CONSTANT RATE, IMPORTANCE OF ESTIMATION, PROBLEMS IN ESTIMATION, CURRENT INDIAN GDP, INDIAN ECONOMIC STATUS.
Indifference curve, microeconomics theory and assignments are prepared by expertsmind.com with the help of qualified and expert tutors.
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concepts of NATIONAL INCOME, GROSS DOMESTIC PRODUCT, GNP. NET INCOME, PER CAPTA INCOME, CALCULATION OF NATIONAL INCOME AT CURRENT RATE & CONSTANT RATE, IMPORTANCE OF ESTIMATION, PROBLEMS IN ESTIMATION, CURRENT INDIAN GDP, INDIAN ECONOMIC STATUS.
Indifference curve, microeconomics theory and assignments are prepared by expertsmind.com with the help of qualified and expert tutors.
http://www.expertsmind.com/economics-homework-assignment-help.aspx
how can I sell my pi coins for cash in a pi APPDOT TECH
You can't sell your pi coins in the pi network app. because it is not listed yet on any exchange.
The only way you can sell is by trading your pi coins with an investor (a person looking forward to hold massive amounts of pi coins before mainnet launch) .
You don't need to meet the investor directly all the trades are done with a pi vendor/merchant (a person that buys the pi coins from miners and resell it to investors)
I Will leave The telegram contact of my personal pi vendor, if you are finding a legitimate one.
@Pi_vendor_247
#pi network
#pi coins
#money
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
how to sell pi coins at high rate quickly.DOT TECH
Where can I sell my pi coins at a high rate.
Pi is not launched yet on any exchange. But one can easily sell his or her pi coins to investors who want to hold pi till mainnet launch.
This means crypto whales want to hold pi. And you can get a good rate for selling pi to them. I will leave the telegram contact of my personal pi vendor below.
A vendor is someone who buys from a miner and resell it to a holder or crypto whale.
Here is the telegram contact of my vendor:
@Pi_vendor_247
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USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
Resume
• Real GDP growth slowed down due to problems with access to electricity caused by the destruction of manoeuvrable electricity generation by Russian drones and missiles.
• Exports and imports continued growing due to better logistics through the Ukrainian sea corridor and road. Polish farmers and drivers stopped blocking borders at the end of April.
• In April, both the Tax and Customs Services over-executed the revenue plan. Moreover, the NBU transferred twice the planned profit to the budget.
• The European side approved the Ukraine Plan, which the government adopted to determine indicators for the Ukraine Facility. That approval will allow Ukraine to receive a EUR 1.9 bn loan from the EU in May. At the same time, the EU provided Ukraine with a EUR 1.5 bn loan in April, as the government fulfilled five indicators under the Ukraine Plan.
• The USA has finally approved an aid package for Ukraine, which includes USD 7.8 bn of budget support; however, the conditions and timing of the assistance are still unknown.
• As in March, annual consumer inflation amounted to 3.2% yoy in April.
• At the April monetary policy meeting, the NBU again reduced the key policy rate from 14.5% to 13.5% per annum.
• Over the past four weeks, the hryvnia exchange rate has stabilized in the UAH 39-40 per USD range.
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how to sell pi coins on Bitmart crypto exchangeDOT TECH
Yes. Pi network coins can be exchanged but not on bitmart exchange. Because pi network is still in the enclosed mainnet. The only way pioneers are able to trade pi coins is by reselling the pi coins to pi verified merchants.
A verified merchant is someone who buys pi network coins and resell it to exchanges looking forward to hold till mainnet launch.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
how can i use my minded pi coins I need some funds.DOT TECH
If you are interested in selling your pi coins, i have a verified pi merchant, who buys pi coins and resell them to exchanges looking forward to hold till mainnet launch.
Because the core team has announced that pi network will not be doing any pre-sale. The only way exchanges like huobi, bitmart and hotbit can get pi is by buying from miners.
Now a merchant stands in between these exchanges and the miners. As a link to make transactions smooth. Because right now in the enclosed mainnet you can't sell pi coins your self. You need the help of a merchant,
i will leave the telegram contact of my personal pi merchant below. 👇 I and my friends has traded more than 3000pi coins with him successfully.
@Pi_vendor_247
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Poonawalla Fincorp and IndusInd Bank Introduce New Co-Branded Credit Cardnickysharmasucks
The unveiling of the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card marks a notable milestone in the Indian financial landscape, showcasing a successful partnership between two leading institutions, Poonawalla Fincorp and IndusInd Bank. This co-branded credit card not only offers users a plethora of benefits but also reflects a commitment to innovation and adaptation. With a focus on providing value-driven and customer-centric solutions, this launch represents more than just a new product—it signifies a step towards redefining the banking experience for millions. Promising convenience, rewards, and a touch of luxury in everyday financial transactions, this collaboration aims to cater to the evolving needs of customers and set new standards in the industry.
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the Telegram username
@Pi_vendor_247
3. Federal Budget
• The federal budget is an annual statement of the
revenues, outlays, and surplus or deficit of the
government of the United States.
• The federal budget has two purposes:
• To finance the activities of the federal government
• To achieve macroeconomic objectives
• Fiscal policy is the use of the federal budget to achieve
the macroeconomic goals.
14-3
4. Macroeconomic Goals
• The government’s macroeconomic goals are
• To achieve full-employment
• To control inflation
• To encourage economic growth
14-4
5. Fiscal Policy
• Fiscal policy can be implemented by changes in
• Government expenditure: It directly affects the
aggregate expenditures.
• Taxes and transfer payments: It indirectly affects the
aggregate expenditures by affecting disposable incomes
of households who change their consumption
accordingly, and by affecting firms’ investment.
14-5
6. Effects of Fiscal Policy
• Fiscal policy may affect the macroeconomic
equilibrium directly or indirectly through affecting
• Aggregate demand: Government spending and taxes
affect the aggregate expenditure
• Aggregate supply: Government spending and taxes can
change quantities of resources, prices of resources, and
state of technology.
14-6
7. Two Types of Fiscal Policy
• Discretionary fiscal policy: Deliberate changes in
government spending and taxes to achieve its
macroeconomic goals.
• Non-Discretionary fiscal policy: Automatic changes in
government spending and taxes which affect the
macroeconomic conditions.
14-7
8. Discretionary Fiscal Policy
• Discretionary fiscal policy depends on the economic
condition
• Expansionary fiscal policy is used during a recession to
eliminate a recessionary (negative GDP) gap, reduce
unemployment, and increase real GDP.
• Contractionary fiscal policy is used during an
expansion to eliminate an inflationary (positive GDP)
gap, and lower the inflation.
14-8
9. Expansionary Fiscal Policy
• Expansionary fiscal policy involves
• Increase government spending (both expenditure and transfer
payments)
• Decrease taxes
• Expansionary fiscal policy may create a fiscal budget deficit.
• Expansionary fiscal policy will increase the aggregate
expenditure and the aggregate demand.
• Used to eliminate a recessionary (negative GDP) gap and to
reduce unemployment.
LO33.1
33-9
10. Expansionary Fiscal Policy with the Multiplier Effect
Real GDP (billions)
Pricelevel
AD2
AD1
$5 billion initial
increase in spending
Full $20 billion
increase in
aggregate demand
AS
$490 $510
P1
LO33.1
0
33-10
• Full-employment GDP is
$510 billion & there is
$20 billion of
recessionary (negative
GDP) gap, and
unemployment
problem.
• To eliminate the gap,
the government
implements an
expansionary fiscal
policy to shift AS curve
to right.
11. Contractionary Fiscal Policy
• Contractionary fiscal policy involves
• Decrease government spending (both expenditure and transfer
payments)
• Increase taxes
• Contractionary fiscal policy may create a fiscal budget surplus.
• Contractionary fiscal policy will decrease the aggregate
expenditure and the aggregate demand.
• Used to eliminate an inflationary (positive GDP) gap and to
reduce (demand-pull) inflation.
LO33.1
33-11
12. Contractionary Fiscal Policy
Real GDP (billions)
Pricelevel
AD3 AD4
$3 billion initial
decrease in
spending
Full $12 billion
decrease in
aggregate
demand
AS
$502 $522
P2
AD5
$510
d
b
aP1
c
LO33.1
0
33-12
• Full-employment GDP is
$510 billion & there is
$12 billion of
inflationary (positive
GDP) gap and inflation
problem (rising price
level to P2).
• To eliminate a gap, the
government implements
a contractionary fiscal
policy to shift AS curve
to left.
13. Policy Options: Expenditure vs Tax
• Effects of government spending changes and tax changes
could different in aggregate expenditure
• Government expenditure directly rises the aggregate
expenditure by the same amount.
• Taxes and transfer payments affect disposable incomes and
only a portion of them (MPC) affects consumption and the
aggregate expenditure by the less than the original change in
taxes.
14-13
14. Policy Options: Expenditure vs Tax
• The government can achieve the same goal by either
government spending or taxes
• Both government spending and taxes have the same effect on
budget.
• Those who prefer smaller government in size and role
advocate tax cuts as expansionary fiscal policy and government
spending cut as contractionary fiscal policy.
• Those who prefer larger government in size and role advocate
expanding government spending as expansionary fiscal policy
and tax raise as contractionary fiscal policy.
14-14
15. Policy Options: Spending vs Investing
• Government spending and taxes can affect current
consumption spending or investment for future
• Government expenditure on infrastructures and R&D raise
revenue of firms, while transfer payments raise disposable
income of households.
• Tax changes on corporate profits and R&D lower costs of firms,
while tax returns to households raise disposable income of
households
• Depending on how they are spent, they ultimately affect the
economic growth.
14-15
16. Policy Options: Spending vs Investing
• Some government spending and taxes affect capital and
technology over time, which will affect the aggregate supply
and the potential GDP.
• Tax credits or subsidies on households’ education spending
and government education spending increase human capital.
• Tax credits or subsidies on firms’ investment on factories and
machineries and government spending on infrastructure
increase capital stock of economy.
• Tax credits or subsidies on Firms’ R&D spending and
Government R&D spending advance technology.
14-16
17. Built-In (Automatic) Stability
• Non-discretionary (automatic) fiscal policy: a fiscal policy
action that is triggered by the state of the economy.
• Taxes vary directly with GDP: Tax revenue increases during
expansions and decreases during recessions
• Transfer payments vary inversely with GDP: Transfer payments
(e.g. welfare, unemployment compensation) decreases during
expansions and increases during recessions.
• Automatic stabilizers are features of fiscal policy that
stabilize real GDP without explicit action by the government.
LO33.2
33-17
18. Built-In (Automatic) Stability
• Automatic stabilizers Reduce severity of business
fluctuations by automatically counteracting to the business
cycle
• During an expansion, as national income increases, with
progressive tax system tax revenues increase more
proportionally and disposable income and consumption
increases less proportionally.
• During a recession, as more workers become unemployed,
more unemployment benefits are paid out, and maintain
consumption of unemployed households.
LO33.2
33-18
19. Built-In (Automatic) Stability
• Taxes and transfer payments automatically change according to
the phase of business cycle.
• Taxes vary directly with GDP: Taxes increase during expansion when
households’ income increase, and reduce disposable income.
• Transfers vary inversely with GDP: Welfare and unemployment
compensation payments increase during recession when
unemployment increases, and increase disposable income.
• Size and effects of automatic stabilizer depend on
• Tax progressivity: More progressively greater the changes in tax
amount.
• Safety net policy: Duration and amount of unemployment
compensation and welfare
LO33.2
33-19
20. Built-In Stability
LO33.2
G
T
Deficit
Surplus
GDP1 GDP2 GDP3
Governmentexpenditures,G,
andtaxrevenues,T
Real domestic output, GDP
0
33-20
• Automatic stabilizers also
affect government budget
automatically
• Deeper the recession,
greater the budget deficit.
• Greater the inflationary
gap, greater the budget
surplus.
21. Evaluating Fiscal Policy
• We cannot judge the government’s stance on fiscal policy
(expansionary, neutral, or contractionary) simply observing budget
deficit or surplus because actual budget deficit or surplus is total
effect of discretionary fiscal policy and automatic stabilizers.
• To reveal the government’s intention on discretionary fiscal policy
(expansionary or contractionary), the actual budget deficit or
surplus must be adjusted by effects of automatic stabilizers.
• During recession the government may run deficits simply because it
spends more on unemployment compensation and welfare without
implementation of any discretionary expansionary policy.
• How do we know which policy the government is taking discretionary?
LO33.3
33-21
22. Cyclically Adjusted Budget
• Cyclically adjusted budget: Estimated federal budget deficit or
surplus if the economy is at full-employment level of GDP
(eliminating effects of automatic stabilizers).
• During recession the government spends extra unemployment
compensation and welfare for cyclical unemployment. Deducting the
extra spending from the actual budget deficits indicates estimated
budget deficits due to the discretionary expansionary policy. If the
estimated budget deficits are zero, then the government is not taking
any discretionary expansionary policy (discretionary fiscal policy
involves increasing spending and cutting taxes, which result in budget
deficits).
LO33.3
33-22
23. Year Actual Deficit –or Surplus + Cyclically Adjusted Deficit–or Surplus +
2000 + 2.4 + 1.5
2001 + 1.2 + 1.1
2002 –1.4 –0.8
2003 –3.3 –2.4
2004 –3.4 –2.9
2005 –2.5 –2.3
2006 – 1.8 – 1.9
2007 –1.1 – 1.3
2008 –3.1 – 2.9
2009 –9.3 – 7.6
2010 –8.3 –6.4
2011 –8.1 – 6.5
2012 –6.6 – 5.3
2013 –4.0 – 2.8
2014 –2.7 – 1.8
2015 –2.4 – 1.9
2016 –3.1 – 2.7
2017 –3.4 – 3.1
2018 – 3.9 – 3.9
LO33.4
33-23
Federal Deficits (-) and Surpluses (+) as Percentages of GDP
• Full employment, 2000
• Tech stock bubble burst, 2000
• Terrorist attack, 2001
• Tax cuts, 2002 and 2003
Great Recession (2008)
• Financial market problems began
in 2007.
• Credit market freeze.
• Pessimism spreads to the overall
economy.
• Recession officially began
December 2007 and lasted 18
months.
• Economy slow to recover.
24. Problems, Criticisms, and Complications
• Fiscal Policy has its limitations and problems
• Problem of timing
• Political Business cycle
• Future policy reversals
• Offsetting state and local finance
• Crowding-out effect
LO33.5
33-24
25. Timing Problem of Fiscal Policy
• Fiscal policy may not be implemented and show effects in timely
manner
• Recognition lag: It takes time to recognize the state of economy and
problems – it takes time to collect data and forecast future course of
economy precisely
• Administrative lag: It takes Congress to pass the laws needed to
change taxes or spending
• Operational lag: It takes time to implement taxes and spending
changes and to have full effect on the economy
• Poorly-timed fiscal policy may destabilize the economy and worsen
recession and inflation. 14-25
26. Timing Problem of Fiscal Policy
• Effects of (Well-timed) Fiscal Policy
14-26
Real
GDP
2006 2007 2008 2009 2010
2011
Real
GDP
2006 2007 2008 2009 2010
2011
• Effects of (Poorly-timed) Fiscal Policy
27. Political Business Cycles
• Political business cycles: Fiscal policy is used for political
motivation of re-election of politicians
• In re-election year politicians want low unemployment
(happier voters toward incumbents), so they pursue an
expansionary fiscal policy without merit. After re-election, they
reverse to contractionary fiscal policy to offset.
• Politically-motivated fiscal policy without regard of economic
condition may initiate fluctuations of economy.
14-27
28. Complications of Fiscal Policy
• Future policy reversals: If households and firms expect future
reversals of fiscal policy, then they many not respond to fiscal
policy.
• Tax cut is implemented, but households believe that the
government must raise taxes near future to offset budget deficit,
then they may save tax return for future tax payment rather than
spending it.
• Off-setting state and local finance
• Expansionary fiscal policy by the federal government may be offset
by contractionary fiscal policy of state and local governments
14-28
29. Crowding-out Effect
• Crowding-out effect: A deficit-spending and tax-cut expansionary
fiscal policy will raise the market interest rate and discourage firms
and households from borrowing (crowd-out private borrowers from
financial market).
• With less borrowing, firms and households cut their spending and
offset the government spending, resulting in no change in
aggregate expenditure. Then, the expansionary fiscal policy has no
effect on aggregate demand.
• Decrease in firms’ investment also temper future economic growth.
14-29
30. Current View on Fiscal Policy
• Let the Federal Reserve handle short-term fluctuations
• Fiscal policy should be evaluated in terms of long-term
effects
• Fiscal policy focuses on long-run effect of economic
growth
• Use tax cuts to enhance work effort, investment, and
innovation
• Use government spending on public capital projects,
R&D, and human capital 14-30
31. The U.S. Public Debt
• National debt: The amount of debt outstanding that
arises from past budget deficits
• National debt clock: http://www.usdebtclock.org/
• $22.1 trillion in April, 2019
• As federal budget deficits continue and widen in future,
the national debt will increase even faster
• The federal government finances its deficit by issuing
U.S. Treasury securities (Treasury bills, notes, and
bonds).
LO33.6
33-31
32. Ownership of U.S. Public Debt, 2018
Sources: Economic Report of the President 2019 and Treasury Bulletin,
March 2019, U.S. Treasury.
LO33.6
33-32
• No problem: 38% of national
debt is held by the federal
government and Federal
Reserves.
• Problem: 29% of national
debt is held by foreigners.
Most of them are held by
Chinese financial institutions
and investors.
33. Federal Debt Held by the Public, Excluding the Federal
Reserve, as a Percentage of GDP, 1970–2018
Sources: Federal Reserve Bank of St. Louis and the U.S. Office of
Management and Budget
LO33.6
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
80
70
60
50
40
30
20
10
0
Year
PercentofGDP
Federal debt held by
the public as a
percentage of GDP
33-33
• Large debt may not be
problem if a borrower
earns enough income to
pay back.
• Low debt-to-GDP ratio
means the government
can pay back with its
taxing power.
• High debt-to-GDP ratio
is a warning sign of
possible default of
government debt since
an economy cannot
generate enough taxes
to pay back.
34. Global Perspective 33.1
Source: Central Intelligence Agency.
LO33.6
33-34
• Debt-to-GDP ratio varies greatly
among countries.
• A debt-to-GDP ratio of the U.S. is
relatively low as compared with
many other developed countries
who encountered financial crisis
in recent years such as Greece
and Italy.
35. The U.S. Public Debt Concerns
• Large national debt is a concern of
• Interest payments on debt amount 6% of federal government
spending.
• 29% of national debt are held by foreigners
• Burdening future generations
• Crowding-out of private investment
• Income distribution
• Large national debt will not lead to bankruptcy of the U.S.
government
• About 75% of GDP
• U.S. government can refinance or collect taxes to pay
LO33.6 33-35
36. Last Word: The Social Security and Medicare Time Bombs
• More Americans will be receiving benefits as they age.
• Social Security shortfalls: Funds will be depleted by 2033
• Medicare shortfalls: Funds will be depleted by 2024
• Possible options “to fix” include:
• Increasing the retirement age
• Increasing the portion of earnings subject to the social security
tax
• Disqualifying wealthy individuals
• High-skilled immigrants rather than low-skilled
• Defined contribution plans owned by individuals (privatization
of social security) 33-36