Presentation is loading. Please wait.

Presentation is loading. Please wait.

Question #2 . 3) Discuss some long term solutions to the Federal Government’s rising national debt. Points to consider in your answer: You must address.

Published byOuti Lehtilä Modified over 5 years ago

Similar presentations

Presentation on theme: "Question #2 . 3) Discuss some long term solutions to the Federal Government’s rising national debt. Points to consider in your answer: You must address."— Presentation transcript:

1 Question #2 . 3) Discuss some long term solutions to the Federal Government’s rising national debt. Points to consider in your answer: You must address entitlement spending Will you hurt the current economy (GDP) with your ideas? Are your ideas politically realistic? How quickly do you feel a need to solve the budget crisis?

2 A Demographic “Perfect Storm”
Why is this happening…. A Demographic “Perfect Storm”

3 Growth of Entitlements
2011 Entitlement Spending & Interest on Debt 50% of Gov’t Budget 2040? Entitlement Spending & Interest on Debt Over 70% of Gov’t Budget

4 Question #4 3) Discuss whether the Federal Reserve should
. 3) Discuss whether the Federal Reserve should keep interest rates at zero Benefits Costs/Risks

5 Who “wins” with zero percent interest rates?
5.25% 0.0% Keep in mind that there is no “free lunch” in economics Zero percent interest rates help some and hurt others They can help in the short run and potentially due damage in The long run…

6 Money is not the same as Wealth!
An increase in money supply does not lead to more wealth Wealth Unchanged MS

7 Friedrich Hayek Economist from School of Austrian Economics Believed in: Free Markets, Limited central bank action artificially low interest rates lead to Malinvestment Friedrich Hayek Bad investment that is only made because interest rates are very low….. Credit bubbles lead to malinvesment which is unproductive does not shift PPF to right This leads to an eventual “bust”

8 Hayek vs. Keynes Rap: Is one right?

9 Quantitative Easing What is quantitative easing—link below

10 Solution: Loose Monetary Policy
Economic Situation GDP growth = -1.0%, Unemployment = 10.0% Little to no inflation Solution: Loose Monetary Policy MS2 i2 MD Interest Rate Qty of $ MS1 i1 Inflation Real GDP AS1 Affects AD AD2 AD1

11 Socratic Seminar Seminar Guidelines: Worth 125 points
Grade based on performance and preparation Bring Notes & Come Prepared Each student must have notes All notes will be collected If absent during seminar: 3-4 Paper will then be required—due Tuesday 4/5th

Download ppt "Question #2 . 3) Discuss some long term solutions to the Federal Government’s rising national debt. Points to consider in your answer: You must address."

Similar presentations

Jonathan Bradley THE GLOBAL ECONOMY IN 2003 A CHOICE OF TWO EVILS?

Jonathan Bradley THE GLOBAL ECONOMY IN 2003 A CHOICE OF TWO EVILS?
MACROECONOMICS I March 28 th, 2014 Class 7. The IS-LM model.

MACROECONOMICS I March 28 th, 2014 Class 7. The IS-LM model.
Free Response Macro Unit #5. 1) The Bank of Redwood has 1,000,000 in total reserves and the reserve ratio is 20%. Draw a correctly labeled T-account which.

Free Response Macro Unit #5. 1) The Bank of Redwood has 1,000,000 in total reserves and the reserve ratio is 20%. Draw a correctly labeled T-account which.
Inflation and Unemployment. Money and Inflation  Rise in money supply does not equal a rise in Real GDP in the long run, since price level rises as well.

Inflation and Unemployment. Money and Inflation  Rise in money supply does not equal a rise in Real GDP in the long run, since price level rises as well.
What should be the role of government in our economy? Discuss this with a partner. Come up with 3 things.

What should be the role of government in our economy? Discuss this with a partner. Come up with 3 things.
Fiscal Policy: The Keynesian View and Historical Perspective

Fiscal Policy: The Keynesian View and Historical Perspective
Socratic Seminar Seminar Guidelines: 1)150 points Grade based on performance and preparation 2)Bring Notes & Come Prepared Each student must have notes—have.

Socratic Seminar Seminar Guidelines: 1)150 points Grade based on performance and preparation 2)Bring Notes & Come Prepared Each student must have notes—have.
Module 35 May 2015.  According to the classical model of the price level, the aggregate supply curve is vertical even in the short run.  Business cycle.

Module 35 May  According to the classical model of the price level, the aggregate supply curve is vertical even in the short run.  Business cycle.
Unit-4 Macro Review Money, Money Supply, Bank Accounting, & Fiscal and Monetary Policy.

Unit-4 Macro Review Money, Money Supply, Bank Accounting, & Fiscal and Monetary Policy.
Chapter 13 Part One What is it?

Chapter 13 Part One What is it?
FISCAL POLICY Inflation Real GDP AS 1 AD 1 AD 2 Economy in recession, Unemployment = 9.1% Expansionary Fiscal Policy needed Lower Taxes & ↑ Gov’t spending.

FISCAL POLICY Inflation Real GDP AS 1 AD 1 AD 2 Economy in recession, Unemployment = 9.1% Expansionary Fiscal Policy needed Lower Taxes & ↑ Gov’t spending.
Fiscal Policy & Monetary Policy

Fiscal Policy & Monetary Policy
Monetary Policy Regulating Money Supply. 1.Discount Rate Changes Interest rate at which Banks borrow directly from the Fed It is only used in an “emergency”

Monetary Policy Regulating Money Supply. 1.Discount Rate Changes Interest rate at which Banks borrow directly from the Fed It is only used in an “emergency”
CONTEMPORARY ECONOMICS© Thomson South-Western 15.1 The Evolution of Fiscal Policy SLIDE 1 Fiscal Policy, Deficits, and Debt 15 15.1The Evolution of Fiscal.

CONTEMPORARY ECONOMICS© Thomson South-Western 15.1 The Evolution of Fiscal Policy SLIDE 1 Fiscal Policy, Deficits, and Debt The Evolution of Fiscal.
5/8 Warm-Up Pass up p. 267-268. 1.What makes stockholders responsible for only a portion of the debts of a corporation? 2.How do banks make money? 3.Give.

5/8 Warm-Up Pass up p What makes stockholders responsible for only a portion of the debts of a corporation? 2.How do banks make money? 3.Give.
Module 31 Monetary Policy & the Interest Rate

Module 31 Monetary Policy & the Interest Rate
3.4 Demand and Supply Side Policies. 3.4.1 Shift in Aggregate Demand Demand Side Policies  Shifting the AD Curve (changes in any components) C, I, G,

3.4 Demand and Supply Side Policies Shift in Aggregate Demand Demand Side Policies  Shifting the AD Curve (changes in any components) C, I, G,
Short-run Policy Tradeoff Chapter 17. Short-run Phillips Curve A curve showing the relationship between the inflation rate and the unemployment rate in.

Short-run Policy Tradeoff Chapter 17. Short-run Phillips Curve A curve showing the relationship between the inflation rate and the unemployment rate in.
Practice Test #1.

Practice Test #1.
Module 32 Money Output & Prices in the Long Run. 1. What are the effects of an inappropriate monetary policy? 2. What is the concept of monetary neutrality?

Module 32 Money Output & Prices in the Long Run. 1. What are the effects of an inappropriate monetary policy? 2. What is the concept of monetary neutrality?

Similar presentations

Ads by Google