Question

questions for discussion chapter 12 ( 15th edition )

Q1-Why are people worried more about federal budget deficits than environmental protection ( In the News " What Worries Americans")?

Q2- who paid for the Revolutionary War? did the deficit financing initiated by the Continental Congress pass the cost of the war on to future generations?

Q3- When are larger deficits desirable?

Answer 1

1. People are more worried for federal budget deficits as this creates additional tax hikes which afects citizens as government tends to finance deficits through tax raises. Environmental protection on other hand is long term issues which needs collective action and hence people tend to ignore thinking that damages and risks are far lessee than tax raises.
2. The Revolutionary War was funded by France at around 100 million pound sterlings. The Continental Congress had piled up excessive debt which then led to debt feilings for future. Consequently money was printed at exponential rste and was paid off to France rather than passing over to generations.
3. Larger deficits are desirable when economy is jn recession and needs huge government spending and tax cuts to fevive real GDP and bring back economic stability. Thus it proppells larger deficits but creates positive externality on economic growth Simultaneously.