Eco/372 Week 2

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Part Two
Consider the following three scenarios. Respond to the reflection questions related to each scenario with your suggestions for government action in complete sentences.
Scenario 1: The government is currently spending three billion, one hundred million on programs and brings in three billion, five hundred million through taxation.

4. Does this create a budget surplus or deficit? Explain. This creates a surplus, because the government is bringing in more taxation rather than spending more.
5. As a member of Congress, what changes would you suggest to fiscal policy to balance the budget? Explain at least two ways you would use the tools of fiscal policy to balance the budget by recommending an "increase" or "decrease" to each tool in your explanation. If I was a member of congress I would suggest we decrease spending, while also keeping our taxation the same. I would also suggest not increasing taxes, because this might hinder our economic growth for quite a while.
6. …show more content…
What are the benefits and opportunity costs of the changes you propose? Consider the impact on economic growth, price stability, and unemployment. I believe that what I’m offering would both lower spending, and cause no harm to economic growth as much of the other ideas proposed. Because what I’m offering is a decrease in spending, while also keeping our taxation at its current rate. Because by increasing taxes, it’s going to hinder economic growth even more. And put us at an extremely low growth rate. Also by decreasing taxes and increasing spending, I may stimulate economic growth, however I may also explode the federal debt even more, this is not a risk I’m willing to

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