Explain how large government budget deficits year after year will have an impact on the equilibrium interest rate ?

PayPal Acceptance Mark

Order Details
General Instructions:
You need to follow the instructions in your syllabus as well as in Angel before starting this assignment.
Plan to submit this assignment at least 2 days before the scheduled due date. NetTutor customer/tech support works on EST and does not have a 24-hour helpdesk that you can rely on. They can take 2 or more days at times to respond to customer service requests so plan ahead to account for these problems.
Your assignment is not complete until you submit it to NetTutor. If you turn in the assignment to the instructor for whatever reason it will be treated as incomplete and you will get a zero grade for this assignment.
Each submission will be graded on a scale of 1-4 and the feedback provided in your NetTutor account (under Paper Center).
Carefully consider the following problems and answer the accompanying questions after reading the report and referring to the relevant chapter of your textbook (also see Grading Rubric on the last page).
In January, 2012, the McKinsey Global Institute published
“Debt and deleveraging: Uneven progress on the path to growth.” In the executive summary, the following observations were made about the state of investment spending in the United States (and the U.K.):
“Today, annual private investment in the United States and the United Kingdom is equal to roughly 12 percent of GDP, approximately 5 percentage points below pre-crisis peaks. Both business investment and residential real estate investment declined sharply during the credit crisis and the ensuing recession.”
The authors identify six ‘markers’ of successful recovery from a financial crisis. One of those markers is a credible plan for balancing the government’s budget in the long-run. In their words, we need “long-term fiscal sustainability.” Long-term fiscal sustainability is important for today’s economic growth.
1. Define economic growth and identify what is the single biggest factor responsible for long-run economic growth. In your answer you need to define that single biggest factor responsible for long-run economic growth.
2. Explain how interest rates influence the incentive to invest. Why does an increase in the market interest rate reduce the incentive to invest? This paragraph should comprise the bulk of your paper.
3. Explain how large government budget deficits year after year will have an impact on the equilibrium interest rate
using the Loanable Funds model.
4. Summarize in a concluding paragraph – why did the McKinsey Global Institute conclude that long-term fiscal sustainability is important for economic growth?

PayPal Acceptance Mark

Do You Need A Similar Assignment?

Place an order with us. Our skilled and experienced writers will deliver a custom paper which is not plagiarized within the deadline which you will specify.

Note; 6 Hours urgent orders deliver also available.

If you need more clarifications contact our support staff via the live chat for immediate response.


Type of paper Academic level Subject area
Number of pages Paper urgency Cost per page: