Budget Deficits and Surplus, Microeconomics

In year one, suppose the federal government has no national debt and spends $100 billion, while raising only $50 billion in taxes. The U.S. Treasury will issue $ billion of government bonds to finance the deficit.

b. In year two, assume tax revenues and government expenditures remain the same. If the government makes a payment on debt service at 10 percent rate of interest , this will yield a total government expenditure in the second year of $ billion.

c. Therefore in year two, the deficit will be equal to $ billion, the amount of new debt issued will be $ billion and the new national debt (year one + year two) will equal $ billion.
Posted Date: 4/7/2012 3:46:49 PM | Location : United States







Related Discussions:- Budget Deficits and Surplus, Assignment Help, Ask Question on Budget Deficits and Surplus, Get Answer, Expert's Help, Budget Deficits and Surplus Discussions

Write discussion on Budget Deficits and Surplus
Your posts are moderated
Related Questions
What is Game Theory?  Game Theory is a mathematical method of decision-making in which a competitive situation is examined to verify the optimal course of action for an interes


Demand Function The function capturing the dependent relationship between the price people are willing to pay for products or service and other factors related to that product

Derivation Of Ordinary Demand Function: Suppose,   and q 1  = (Q 1 1 , Q 2 1 ,..., Q n 1 )T. Let M0 be the money income and p 0 q 0  = M 0  and p 0 q 0 ≥ p 0 q 1 , where p

argument against in favour of traditonel theory profit maximisation

Establish relationship between production and cost for a firm operation in perfect competition market in case of i phone

Private benefit and social benefit: Bridge the gab between private cost and social cost, and private benefit and social benefit.Under perfect market, there may be a divergence

THE WORLD BANK: The World Bank is another of the 'Brettonwoods Twin Sisters'. The World Bank, as it obtains presently, is an  umbrella organisation, under which five different


#qu3. An industry is composed of 20 firms, all with equal sales. The Herfendahl Index ratio in this industry is a. 1000 b. 500 c. 800 d. This cannot be determined from the informat