Each of the following headlines reflects an example of...

Each of the following headlines reflects an example of deficit spending. Which of the causes of budget deficits is suggested by each headline? a. President Proposes Tax Cut Extensions to Keep Economy on Track b. Baby Boomers' Retirement Will Strain Social Security and Medicare c. Hurricane Recovery Effort to Require Massive Federal Aid

Transcript

00:01 Hello, so today i'm going to answer a question about what are the potential causes or reasons to have deficit for doing so i'm going to sketch the four main options here and then i'm going to answer each of the options the first option would be to have a deficit because of politics so normally politicians postpone dead in order to receive legitimize in that moment so that's when governments when they are going to go out spend a lot of their budget in order to have a favorable image in the public and without assuming the cost.

00:37 The second one would be the k -national fiscal deficit.

00:41 So the idea is that they want to stimulate the economy via demand so they increase a lot the consumption of the government in order to increase the economy work and the economy surplus or the economy production and that then will cover the cost that they were needed to accelerate first.

01:01 Let the reason would be a cyclical reason so as you may know the economy works by cycles by business cycle they did that when there is the contraction of the economic the income is going to be reduced and also the spending should be increased a little bit in order to mitigate this reduction so this will generate that there is a deficit and the final one will be interest of payment so sometimes the government need to spend more that it received just to addressing the debt that let's say all the governments give them or just addressing their original loans that they have.

01:37 Now for the specific reason, so president proposes tax cut extensions to keep economy on track.

01:44 This will be clearly a canadian fiscal deficit or also a cyclical reason.

01:49 So they are doing this to keep the economy stimulating and by the mentor of reducing the cyclical effect.

01:58 The second one will be that baby humus retrain, determined with the strength social security and medicare.

02:02 So this could be like a politic reason.

02:05 So at the beginning, the government give a lot of benefits to these people in order to get legitimacy.

02:12 And now other governments are going to be forced to supply or to provide these benefits that they give them...

Question

Please give Ace some feedback