1. Why does the federal deficit affect domestic programs? 2. What would be the benefit of...

1. Why does the federal deficit affect domestic programs?

2. What would be the benefit of a balance budget amendment?

3. Do sports facilities/stadiums justify financial support cities and states?

Solutions

Expert Solution

1) Federal deficit is the deficit in government budget which is the difference between revenue and expenditure. When there is a federal deficit the expenditure of the government is greater than the revenue it receives from tax as well as non tax sources. There are mandatory programs including social security Medicare medicaid and unemployment insurance. Besides there are other programs which are not mandatory by nature but are important from the perspective of raising the social welfare including poverty alleviation programmes and schemes related to agriculture. Increasing fiscal deficit impedes the ability of the government to spend on these domestic programs. The focus then shifts on reducing the deficit and this causes the spending on domestic programs to reduce primarily. Therefore it is necessary that Federal deficit is not allowed to swell up by the time.

2) a balanced budget amendment will impose a fiscal discipline on the government so that no extravagant government is spending will be persisted in the economy. The balanced budget amendment requires the government to run a balanced budget which implies that government will not be able to increase its spending more than the revenue it is earning. In any particular year if it has to increase its spending then it has to collect more revenue to maintain the budget in balance. However there are certain disadvantages especially when the economy is suffering from recession and the government is expected to provide fiscal stimulus.

3) sport facilities on Stadium are able to generate externalities positive by nature. When more and more people from other cities arrive they are likely to spend and enjoy the match is being played. This increases the GDP of the state or a particular City and helps in increasing the tax as well as non tax revenues from that region. Government experiences and increase in its revenue when it construct stadiums because stadiums are able to attract spectators from different parts of the country. This means the financial support that the government is expected to show for the construction of stadiums is justified.

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

In a period of trade deficit, what would happen if domestic investment falls by $10 billion,...

In a period of trade deficit, what would happen if domestic investment falls by $10 billion, private savings increases by $15 billion, and public savings decreases by $5 billion? Select the correct answer below: the trade deficit will remain unchanged the trade deficit will decrease there will be a trade surplus the trade deficit will increase

How does the imposition of a quota affect the domestic price of the import, the domestic...

How does the imposition of a quota affect the domestic price of the import, the domestic consumption, the domestic production, and the quantity imported?

1. What is the economic problem? Why does scarcity affect everyone? 2. Because of the quantity...

1. What is the economic problem? Why does scarcity affect everyone? 2. Because of the quantity and quality of its resources, the U.S. has an absolute advantage in the production of many goods and services. Does this imply that the U.S. cannot benefit from trading with a developing country that has less productive ability? Why or why not? 3. The following table shows output per hour for Martha and Stewart who make gift baskets and potholders: Output per Hour Martha...

What role does the Fed play in our national debt and federal deficit? Does government borrowing...

What role does the Fed play in our national debt and federal deficit? Does government borrowing crowd out private-sector spending? Explain.

What impact would an increase in the nation’s money supply or the federal government’s budget deficit...

What impact would an increase in the nation’s money supply or the federal government’s budget deficit have on the real GDP and price level in the macro-economy? What phase of the business cycle might this create?

How does social programs affect health care?

What is Sarin and how does it affect our nervous and muscular system? Why would it...

What is Sarin and how does it affect our nervous and muscular system? Why would it be causing these symptoms? Please answer in detail, some key areas of interest below. Sodium ions Sodium ion channels Calcium ions Sarcoplasmic reticulum Actin Myosin Troponin Synapse Neurotransmitters Membrane potential T-tubules ATP Pre-synaptic neuron(s) Post-synaptic muscle fiber Symptoms: Dizzines, increase HR, SOB, muscle cramps, unconciousness.

Question