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Should fiscal policymakers reduce the government debt? After two decades of budget deficits
and increasing debt, the federal government has been experiencing significant budget surpluses
for some years. These questions address the costs and benefits of reducing the government debt.
4.1.
Martha, an economist, believes that budget surpluses
should be used only to pay down the government debt.
She would emphasize which of the following
arguments?
A. If Canada accumulates more
government debt, then its living
standards might decline or stagnate.
B. The growth of output will outpace
the growth of debt.
C. Using the budget surplus to
increase education expenditures will
increase future living standards.
Should fiscal policymakers reduce the government debt? After two decades of budget deficits
and increasing debt, the federal government has been experiencing significant budget surpluses
for some years. These questions address the costs and benefits of reducing the government debt.
Solution
C. Using the budget surplus to increase education expenditures will increase future living
standards.
Should fiscal policymakers reduce the government debt- After two decad.docx

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Should fiscal policymakers reduce the government debt- After two decad.docx

  • 1. Should fiscal policymakers reduce the government debt? After two decades of budget deficits and increasing debt, the federal government has been experiencing significant budget surpluses for some years. These questions address the costs and benefits of reducing the government debt. 4.1. Martha, an economist, believes that budget surpluses should be used only to pay down the government debt. She would emphasize which of the following arguments? A. If Canada accumulates more government debt, then its living standards might decline or stagnate. B. The growth of output will outpace the growth of debt. C. Using the budget surplus to increase education expenditures will increase future living standards. Should fiscal policymakers reduce the government debt? After two decades of budget deficits and increasing debt, the federal government has been experiencing significant budget surpluses for some years. These questions address the costs and benefits of reducing the government debt. Solution C. Using the budget surplus to increase education expenditures will increase future living standards.