# Econ

posted by .

- Explain the statement" The most unlikely problem of the national debt is that the government will go bankrupt."

- Consider the statement: "Our Grandchildren may not suffer the entire burden of a federal deficit." (What is this like a trick question?) Is this true or false?

- Distinguish M1, M2, and M3. What are near monies?

- If you deposit a 20,000 dollar check into a checking account and your bank has a three percent reserve requirement, by houw much will the bank's excess rise? Consider the money multiplier. What is the maximum increase in money supply?

Do a little research, then take a shot. What do you think.
hint 1: what can (federal) governments do than ordinary citizens cannot do? And who imposes sanctions on people who default on their loans.
hint 2: is there government spending that benefits people now as well as in the future.

I already assessed the first question. Although I would appreciate some assistance on the second and third one. No matter what I research the questions myself all I'm really looking for is a point in the right direction.

Thanks

Q2 There is a notion of deficit spending that benefits of the money spent today go entirely to the current generation; however future generations get stuck with the bill.

However, one could argue that some spending done today makes the future look brighter. For example, money spent on infrastructure such as highways leads to economic growth which leads to a more prosperous existence for future generations. Also, are we a rich prosperous nation today because of the huge deficit spending made in WWII.

Q3) Wikipedia has a brief but probably adequate description. Google Money Supply Definitions.

Q4) With a 20K deposit, the bank needs to keep 3% (\$600) in reserve. Excess reserves, which it can loan out is the rest. The money multiplier (which gives the maximum expansion) is 1/rr = 1/.03 = 33.333

## Similar Questions

1. ### college-economics

The gross national debt initially is equal to \$3 trillion and the federal government then runs a deficit of \$300 billion: total 5 questions. Confused, believe gross debt = all fed govt debt What is the new level of gross national debt?
2. ### College Econ

The gross national debt initially is equal to \$2.5 trillion and the federal government then runs a defict of \$100 billion: 1. What is the new level of gross national debt?
3. ### economics

Explain this statement: the most unlikely problem of the national debt is that the government will go bankrupt.

I cannot figure this our for the life of me!Assume that the gross national debt initially is equal to \$3 trillion and the federal government then runs a deficit of \$300 billion. What is the new level of gross national debt?
5. ### Economic

The federal budget deficit is gone, transformed by a strong economy into a string of projected surpluses that should grow larger for years to come.... Eliminating the deficit is hardly the end of the governmentâ€™s financial troubles, …
6. ### Economic

The federal budget deficit is gone, transformed by a strong economy into a string of projected surpluses that should grow larger for years to come.... Eliminating the deficit is hardly the end of the governmentâ€™s financial troubles, …
7. ### Economics

Assume that the gross national debt initially is equal to \$3 trillion and the federal government then runs a deficit of \$300 billion. i. What is the new level of gross national debt?
8. ### Economics

assume that gross national debt is equal to \$3million and the federal government then runs a deficit of \$300 billion. What is the new level of gross national debt
9. ### macroeconomics

b. Now suppose that the gross national debt initially is equal to \$2.5 trillion and the federal government then runs a deficit of \$100 billion: i. What is the new level of gross national debt?
10. ### Personal Finance

The global economy seems to be in a debt crisis. The National Debt (what we owe) of the United States is now over \$18 Trillion dollars and growing every day. Our Gross Domestic Product (our income) is around \$16 Trillion. That means …

More Similar Questions