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A fraction of the funds borrowed by the federal government between 2008 and 2015 were utilized to fund public investments in a number of solar power companies that produced little output and halted operations. These concerns provided no repayments to the government. In what sense might this fraction of deficit spending arguably have imposed a "burden" on future generations?

Short Answer

Expert verified

this fraction of deficit spending arguably has imposed a "burden" on future generations by investing in solar companies.

Step by step solution

01

Introduction

The Federal and State arrangements give a financial lift to the sunlight based energy industry and in this manner, organizations have been a circle back choice for the sun oriented energy in the US confronting a rough presence since the Reagon time.

02

Explanation

Tax breaks and expanded spending to grow the sun oriented energy creation base was the method for such limited time public venture. Sun oriented city in New York is one such speculation among a host. The speculation in any case, over the long haul, made little result and stopped tasks. In this manner, the interest in the sunlight based organizations could be a critical weight on the group of people yet to come as a causal variable of expanded obligation GDP proportion and inefficient obligation.

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Most popular questions from this chapter

Explain how each of the following will affect the net public debt, other things being equal.

a. Previously, the government operated with a balanced budget, but recently there has been a sudden increase in federal tax collections.

b. The government had been operating with a very small annual budget deficit until three hurricanes hit the Atlantic Coast, and now government spending has risen substantially.

c. The Government National Mortgage Association, a federal government agency that purchases certain types of home mortgages, buys U.S. Treasury bonds from another government agency.

Under what circumstance would the transfer of U.S. taxpayers' funds to holders of U.S. debt residing in Japan and China constitute a "burden" on future generations of U.S. taxpayers? Explain briefly.

Refer back to Problem 14-11. If the politician defines "the rich" as people with annual taxable incomes exceeding \(1 million per year, what is another difficulty with the politician's reasoning, given that "the rich" rarely earn a combined taxable income exceeding \)1 trillion, yet the federal deficit has regularly exceeded $1 trillion in recent years?

How might the fact that many people who vote in national elections pay very low or even no income taxes affect the capability of the political process to reduce government budget deficits?

Suppose that the economy is experiencing the short-run equilibrium position depicted at point Bin the diagram below. Explain the short-run effects of an increase in the government deficit on equilibrium real GDPand the equilibrium price level. What will be the long-run effects?

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