AIM: HOW DOES THE BUDGET DEFICIT AND NATIONAL DEBT INFLUENCE OUR ECONOMY?

Do Now:What is a budget?

Aim: How does the budget deficit and national debt influence our economy?

Budget President Congress Revenues (taxes) Expenditures (spending/appropriations) Categories of spending (Big 3)

Aim: How does the budget deficit and national debt influence our economy?

Budget deficit

Define

Budget Surplus?

Aim: How does the budget deficit and national debt influence our economy?

National Debt

Define – 18 trillion dollars

Aim: How does the budget deficit and national debt influence our economy?

Interest Payments on the Debt

part of the budget Grows as the debt grows 7% of budget due to low interest rates

Aim: How does the budget deficit and national debt influence our economy?

Effects of National Debt

Crowding out (?) Increase total demand ofr goods/services

(inflation) Interest payments on debt Foreign owned portion

Summary: Budget Deficit and National Debt

1. Define Budget.2. What is our federal government’s major

source of revenue?3. What is meant by expenditure?4. What are the 3 biggest categories of

federal spending?

Summary: Budget Deficit and National Debt

When government expenditures exceed revenue a ________ has occurred.

When government revenues exceed expenditures a _________has occurred.

The accumulated borrowing the federal government engages to finance its budget deficits is the ________________.

Aim: How does the budget deficit and national debt influence our economy?

What is the current level of the U.S. national debt?

What are some negative effects of a large national debt?

Aim: How should the problem of budget deficits and the national debt be dealt with?

Do Now: What is a budget deficit?

What is the national debt?

Aim: How should the problem of budget deficits and the national debt be dealt with?

Cut Spending? Which areas?

Negative effects? Politicians?

Aim: How should the problem of budget deficits and the national debt be dealt with?

Raise Taxes

For whom? How much? Negative effects

Aim: How should the problem of budget deficits and the national debt be dealt with?

Balanced Budget Amendment Define

difficulties?

Good for the economy?

Aim: How should the problem of budget deficits and the national debt be dealt with?

Demand-Side Theory Keynesian Economics Deficit spending to stimulate the economy

during a recession/contraction Democrats favor this theory

Aim: How should the problem of budget deficits and the national debt be dealt with?

Supply-Side theory Across the board tax cuts Individuals and corporations “trickle down” economics Stimulate the economy Reaganomics Favored by Republicans

Aim: How should the problem of budget deficits and the national debt be dealt with?

Other concerns Can we afford our debt?

Debt as a percentage of GDP

Foreign owned portion of the debt

Aim: How should the problem of budget deficits and the national debt be dealt with?

Does the problem of budget deficits and national debt need to be solved for? Explain.