Long run economic growth
a sustained increase in real GDP per capita
What does an increase in population do to the standard of living for the average person?
an increase in population lowers the standard of living for the average person -- there are now more people to share a given amount of real GDP.
Explain Rule of 70
tells us that that the time it takes a variable that grows gradually over time to double is approximately 70 divided by that variables annual growth rate.
*can only be applied to a positive growth rate.
the law of diminishing returns to capital
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Productivity/Labor Productivity
output per worker (in some cases output per hour)
GDP per worker
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Debt Held by the Public
all federal debt held by individuals, corporations, state or local governments, Federal Reserve Banks, foreign governments, and other entities outside the United States Government EXCEPT Federal Financing Bank securities.
debt ceiling
The debt ceiling allows the government to spend the same amount of money to provide government programs.Not raising the debt ceiling worsens the credit rating of the US and can cause confusion in world markets.
should the US balance the budget and strive to
eliminate deficits and debt????? What are the opportunity costs?
Balancing the debt would mean increasing taxes and huge government program cuts. People would lose retirement benefits, healthcare, roads among many other necessary services the government provides. The government continues to pay back debt to its lenders
intra-governmental debt
Intragovernmental debt accounts for the government account series held by the government. Think- intra means within, so it is debt owed within the government.
(money the government owes to itself. IOU's borrowed again existing trust funds. 5.5 trillion)
discretionary spending
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Public debt
Dept held by the public is owed to domestic private savers, foreign savers central banks banks and other financial institutions. 14.25 trillion