Session:18 The Impacts of Government Borrowing
Review Questions
Principles of Macroeconomics 3e | Leadership Development – Micro-Learning Session
Rice University 2020 | Michael Laverty, Colorado State University Global Chris Littel, North Carolina State University| https://openstax.org/details/books/principles-macroeconomics-3e
7. Based on the national saving and investment identity, what are the three ways the macroeconomy might
react to greater government budget deficits?
8. How would you expect larger budget deficits to affect private sector investment in physical capital? Why?
9. Under what conditions will a larger budget deficit cause a trade deficit?
10. What is the theory of Ricardian equivalence?
11. What does the concept of rationality have to do with Ricardian equivalence?
12. What are some of the ways fiscal policy might encourage economic growth?
13. What are some fiscal policies for improving a society’s human capital?
14. What are some fiscal policies for improving the technologies that the economy will have to draw upon in
the future?
15. Explain how cuts in funding for programs such as Head Start might affect the development of human
capital in the United States.
react to greater government budget deficits?
8. How would you expect larger budget deficits to affect private sector investment in physical capital? Why?
9. Under what conditions will a larger budget deficit cause a trade deficit?
10. What is the theory of Ricardian equivalence?
11. What does the concept of rationality have to do with Ricardian equivalence?
12. What are some of the ways fiscal policy might encourage economic growth?
13. What are some fiscal policies for improving a society’s human capital?
14. What are some fiscal policies for improving the technologies that the economy will have to draw upon in
the future?
15. Explain how cuts in funding for programs such as Head Start might affect the development of human
capital in the United States.