Budget Deficits and Surplus, Microeconomics

Assignment Help:
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.

Related Discussions:- Budget Deficits and Surplus

Supply, concept of supply and the factors that affect the supply

concept of supply and the factors that affect the supply

Student, equation for a demand curve is p=2/q. what is the elasticity of de...

equation for a demand curve is p=2/q. what is the elasticity of demand if price falls from 5 to 4

What factors shift the aggregate demand curve to right, What factors shift ...

What factors shift the Aggregate demand curve to right and what factors shift the AD curve to left?  AD shifts to the right when any component of AD enhances autonomously; e.g

Economic instruments, Economic instruments Financial rewards, incentives an...

Economic instruments Financial rewards, incentives and penalties that operate automatically via market forces, to encourage beneficial behavior.

State about the prices - price level, State about the prices - Price level ...

State about the prices - Price level Prices are of great significance in macroeconomics as indeed they are in microeconomics. Though, in microeconomics we are more interested i

Elasticity, elasticity concept in policy formulation

elasticity concept in policy formulation

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd