Question

Work through the National Budget Simulation ( SEE LINK BELLOW) . in an effort to achieve a budget deficit of $1100B dollars. Scenario: The President of the United States has been elected on the promise of fiscal responsibility. By law he cannot reduce the net interest paid on the debt. The President's budget is projected to leave the country with a $1100B deficit. The United States is subject to global security concerns. At the same time, a lingering recession and financial markets rescue package reduces the government's tax revenues and forces the government to increase its spending on unemployment benefits, welfare, housing assistance, food stamps, and other need-based programs. Because of the increased spending and reduced revenues, the nation falls into a projected deficit of nearly XXX in 2015 (This is the first piece of the information you need to find). The President is committed to keeping his campaign promises in order to avoid future crisis over the US's financial standing. He must raise taxes, cut spending, or a combination of both to stay within his new guideline of a deficit below $1100B. The President turns to you, his trusted economic advisor, for help. (Note: While some events in this scenario reflect actual events, others are hypothetical for the purposes of this exercise. Budget figures in the simulation are actual White House figures of 2012, including spending and revenues of 2012.) Given the information you watch and read in the preceding Module 7 activities, use that background to answer the following questions for discussion. Since the simulation is using 2012 numbers, start off with actual numbers just to inject a sense of reality into this discussion. Research this information from a reliable source and begin your analysis with what you found. Detail your choices for cuts and spending, paying close attention to what you read in the Bowles and Montgomery articles. Finally, analyze the effect your choices will have on the economy.

LINK:

https://archive.econedlink.org/national-budget-simulator.php

Answer 1

Solution(s):

Ans:

The President of the United States has been chosen on the guarantee of monetary obligation. By law he can't lessen the net interest paid on the obligation. The President's financial plan is anticipated to leave the nation with a $1100B shortfall. The United States is liable to worldwide security concerns. In the meantime a waiting retreat and monetary markets salvage bundle decreases the administration's duty incomes and strengths the legislature to build its spending on unemployment advantages welfare lodging help nourishment stamps and other need based programs.The President is focused on keeping his crusade guarantees to stay away from future emergency regarding the US's budgetary standing. He should raise charges cut spending, or a mix of both to stay inside of his new rule of a shortfall underneath $1100B. Financial or Budget deficit plan shortage is an essential marvels in monetary approach. At the point when an economy is in subsidence the legislature more often than not runs a financial plan deficiency so as to support the economy. Financial plan surplus is a circumstance inverse to a financial plan shortage i.e in a financial plan surplus an administration's pay surpasses its aggregate uses. We typically see spending plan surpluses when economy is experiencing unreasonable expansion.

Equation

Financial plan Deficit = Government's Total Expenditures ? Government's Total Income

From the table the total Spending = 3675.78

While a few occasions in this situation reflect genuine occasions others are theoretical for the reasons of this activity. Financial plan figures in the reenactment are real White House figures of 2012 including spending and incomes of 2012.