Eco 372 Week 4 Reflection

In week four, we discussed how deficits, surpluses, and debt in relation to the macroeconomic health of the United States.

A government deficit is when federal spending is greater that the tax revenue received for that year. Each year the deficit is added to the current debt, the Treasury must sell bonds to raise the money to cover deficit. At first, the deficit spending does boost economic growth. As we have read in the previous weeks, government spending does have a positive effect on the economy; it lowers interest rates, increasing the money supply available, and creates jobs, which lowers the unemployment rate. However, if the deficit is added to the national debt this is very damaging to the economy because the government can let the value of the U.S....