Federal Budget, Taxes and Debt

Federal Budget, Taxes and Debt

“Blessed are the young, for they shall inherit the national debt.”
― Herbert Hoover – 31st US President – Born 1874 Died 1964

 

From our lectures you have learned that in the Market system we tend to have low Government intervention. However, governments also intervene in the markets to solve market failures such as pollution, unemployment, intervene to provide health care, property rights, education, infra structure, defense and much more. In order to achieve these so important goals the government needs funding. Funding traditionally is accomplished through tax collection.

Due to the way Government Budget has been managed it has become a common practice for governments to fund their spending and plan for expansion relying not only on Taxes, but also relying on Debt creation through the Bonds Market

1) How does governments create debt ? 15 points

2) What is the crowding out effect ? 15 points

Watch the following TED video, as you watch the video take notes , YOU ARE REQUIRED TO USE EVIDENCES FROM THE TED TALK FOR YOUR ANSWER TO QUESTIONS 3 AND 4: ;

LINK

3) Which are the consequences of keep raising our debt ? Why ? Explain. OFFER DETAILS AND EVIDENCES FROM THE TED TALK – 30 POINTS

4) Should Governments focus more on becoming more efficient with the use of Tax Revenues hence reducing the cost of delivering services to their citizens ? Why? Explain . OFFER DETAILS AND EVIDENCES FROM THE TED TALK – 30 POINTS

5) Should the Government raise taxes ? Why ? Explain. OFFER DETAILS – 10 POINTS

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