Should fiscal policymakers reduce the government debt- After two decad.docx
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The document discusses whether fiscal policymakers should reduce government debt after experiencing budget surpluses. Economist Martha argues that these surpluses should be used to pay down debt, emphasizing that doing so could prevent stagnation in living standards. It suggests that using surpluses for education spending may enhance future living standards.
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Should fiscal policymakers reduce the government debt- After two decad.docx
- 1. Should fiscal policymakers reduce the government debt? After two decades of budget deficits and increasing debt, the federal government has been experiencing significant budget surpluses for some years. These questions address the costs and benefits of reducing the government debt. 4.1. Martha, an economist, believes that budget surpluses should be used only to pay down the government debt. She would emphasize which of the following arguments? A. If Canada accumulates more government debt, then its living standards might decline or stagnate. B. The growth of output will outpace the growth of debt. C. Using the budget surplus to increase education expenditures will increase future living standards. Should fiscal policymakers reduce the government debt? After two decades of budget deficits and increasing debt, the federal government has been experiencing significant budget surpluses for some years. These questions address the costs and benefits of reducing the government debt. Solution C. Using the budget surplus to increase education expenditures will increase future living standards.