At times, politicians have argued that we should have a law that requires Congress to balance...

At times, politicians have argued that we should have a law that requires Congress to balance the federal budget. Some politicians believe this is the fiscally responsible approach while others think it is better to allow the federal government the leeway to determine the budget based on the state of the economy. Some politicians worry about running a deficit as this will add to the federal debt. Most states in the US have balanced budgets.

What are the arguments for a balanced budget and what are the arguments against having one?

Do you think we should be worried about the size of the federal debt? Why or why not?

Which approach do you agree with and why?

Expert Solution

Following are some statistics about the US economy:

US growth rate is 2 %
Inflation rate is 2 %
US debt is 108 % of GDP.

US unemployment rate has been close to 3.4 % or it can be said that economy is operating at full employment level. US debt which is over 108 %, is not good for economy. Government debt level must fall when economy booms, But US debt is rising which is not good news for economy. Debt can rise only when economy faces the problem of recession. During recession, it becomes incumbent on government to raise the level of output and employment.

Pros of Balanced budget:

it does not cause rise in the inflation.
Future generation does not pay expenditure made in past.
Government does not become vulnerable to interest rate.

Cons:

Government can not deal with recessionary pressures.
There will be fall in the government social securities programs.

Further, government has offered tax concession, which would further raise the level of debt.

Thus,as of now , government should reduce its debt level.

Rahul Sunny answered 1 year ago

Question: At times, politicians have argued that we should have a law that requires Congress to...

Question: At times, politicians have argued that we should have a law that requires Congress to balance the... At times, politicians have argued that we should have a law that requires Congress to balance the federal budget. Some politicians believe this is the fiscally responsible approach while others think it is better to allow the federal government the leeway to determine the budget based on the state of the economy. Some politicians worry about running a deficit as this will...

There are some politicians in the U.S. Congress that believe the Federal Reserve should be less...

There are some politicians in the U.S. Congress that believe the Federal Reserve should be less independent from the U.S. government. Some say this would be a disaster for the U.S. economy. Do you agree or not with those who seek to reduce central bank independence? Why? Explain your answer in a comprehensive way, providing any data available and making reference to studies available on this issue.

We discussed numerous times the importance of identifying shocks to money demand. In particular, we argued...

We discussed numerous times the importance of identifying shocks to money demand. In particular, we argued that the policy implications of shocks to money demand differ based on whether the shock to money demand was real or portfolio. a) (5 points) Let us consider a portfolio shock that increases money demand, say due to non-monetary assets becoming riskier and less liquid. Draw a real money demand and real money supply diagram locating the initial equilibrium point as point A and...

Recently, many people have argued that we should privatize much of government—that is, turn over to...

Recently, many people have argued that we should privatize much of government—that is, turn over to the private sector such traditional governmental activities as running prisons, Social Security, public broadcasting, and even public schools. Is this a good idea? Why or why not? What programs, if any, should be privatized? What are the relative disadvantages and advantages in privatization? Use the chapter to support your argument

We often hear politicians discussing taxing firms that earn “excessive” profits. Other times, such as in...

We often hear politicians discussing taxing firms that earn “excessive” profits. Other times, such as in the wake of the 2008 financial crisis, we observe firms requesting “bailouts” from the government to compensate for losses. In the context of this section’s material on the role of economic profits and loss, discuss the implications of policyaimed at reducing profits or mitigating losses.

Often times, we are not told to use a mean or a proportion, but we should...

Often times, we are not told to use a mean or a proportion, but we should know which is the best method for measuring our data. Explain, what type of data would it be most appropriate to use a mean and what type of data would it be most appropriate to use a proportion?

1) Some researchers have argued that paraphyletic groups are not “real” and should not be used...

1) Some researchers have argued that paraphyletic groups are not “real” and should not be used in scientific discussions. What do you think? 2) The fact that organisms evolve by natural selection means that adaptive explanations make sense in biology. Does this mean that every organismal trait has an adaptive explanation?

We have argued that the majority of women work within the service sector of the Canadian...

We have argued that the majority of women work within the service sector of the Canadian economy. We have also discussed ways in which service-sector employers maintain control over their workers and their interactions with customers or clients. Discuss: 1) the characteristics of women’s work in service jobs and, 2) the ways in which workers are subjected to forms of control in service jobs. Why is it assumed that women are more suitable than men for many forms of service...

Should the modern President have imperial power and treat the Congress and Courts as advisors to...

Should the modern President have imperial power and treat the Congress and Courts as advisors to implement his orders to get things done. Or should we go back to the Constitutional idea that Congress, specifically the House, be the governor of the country and protector of the people with the President staying out of domestic issues?

To what extent should we balance market efficiency and fairness? Should we compromise one for the...

To what extent should we balance market efficiency and fairness? Should we compromise one for the other?

Question