Washington Post Business Deficit Eclipse ✓ Solved

Httpswwwwashingtonpostcombusiness20200128us Deficit Eclipse

Read this. Most of these articles will involve analysis of policy proposals. It is important that you remain politically objective and consider the economic implications of the article in a measured and analytic way. The goal of these exercises is to apply the theoretical framework we will be learning to contemporary real world issues – less important is whether you agree with a particular policy or not. Your analysis should include both written analysis and graphs to support your arguments.

There is no strict length requirement for your analyses but you should ensure that you are addressing the content of the news article in a clear and thorough manner. Legibility is a key part of communicating your ideas so if your work is too messy to read or too disorganized to understand, you will lose points. Grading is out of five points possible and will focus on three main areas: 1) addressing the issues discussed in the article, 2) accurately using economic theory to analyze the issues, 3) clarity of communication. Your lowest score will be dropped; because of this, no late analysis assignments will be accepted. Below is a rough breakdown of grading expectations: 5 – Thorough and accurate discussion of main issues in the article using the principles and models of the class.

Models are applied to the problem in a consistent and appropriate way. No errors in correctly applying and interpreting economic theory to the issues in the article. Analysis is clear and easy to follow. 4 – Relatively thorough and accurate discussion of main issues in the article using the principles and models of the class. Few errors in correctly applying and interpreting economic theory to the issues in the article.

Analysis is clear and easy to follow. 3 – Discusses the main issues in the article using the principles and models of the class but exhibits several inaccuracies and/or does not thoroughly cover the issues. Analysis is a bit confusing. 2 – Discusses the main issues in the article using the principles and models of the class but exhibits many inaccuracies and/or does not thoroughly cover the issues. Analysis is difficult to follow. 1 – Exhibits minimal effort and/or success in applying the principles and models of the class to the article 0 – Exhibits absolutely no effort to apply the principles and models of the class to the article (or you didn’t turn it in)

Sample Paper For Above instruction

The article, titled "Deficit Eclipse," discusses the rising U.S. deficit amid various fiscal policy proposals and economic challenges. The increasing deficit raises concerns about long-term fiscal sustainability and implications for economic growth. This analysis will evaluate the policy implications of the fiscal deficit using economic theories, focusing on government spending, taxation, and their effects on aggregate demand and supply.

The core issue in the article revolves around the expanding budget deficit, which occurs when government expenditures exceed revenues. Economically, deficits can be financed through borrowing, which may lead to higher interest rates and crowding out private investment. According to Keynesian economic theory, increased government spending can stimulate aggregate demand, especially during downturns, leading to economic growth. Conversely, persistent deficits might induce inflationary pressures or elevate future tax burdens, risking fiscal insolvency.

Applying the Aggregate Demand-Aggregate Supply (AD-AS) model, an expansionary fiscal policy—such as increased government spending or tax cuts—shifts the AD curve to the right. While this can reduce unemployment and boost output in the short run, it may also cause demand-pull inflation if the economy is near or at full capacity. The article's concern about deficits suggests the government might consider spending cuts or increasing taxes to offset deficits, which would shift the AD curve leftward, potentially slowing economic activity but improving fiscal balance.

Furthermore, the concept of the public debt-to-GDP ratio is relevant. Rising deficits increase public debt, which could become unsustainable if interest rates rise or if economic growth slows. High debt levels can lead to higher future taxes, which may reduce long-term growth prospects. Ricardian equivalence suggests that if consumers anticipate higher taxes to pay for current deficits, their consumption may decline, offsetting the stimulative effects of government spending.

Graphs illustrating these concepts display the shifts in AD with fiscal policy changes, highlighting potential trade-offs between short-term stimulus and long-term fiscal health. The article emphasizes the importance of balancing fiscal policy to sustain economic growth while maintaining fiscal responsibility.

In conclusion, the "Deficit Eclipse" article underscores the complex interplay of fiscal policy, economic growth, and sustainability. Economic theory indicates that while deficits can stimulate demand in the short run, long-term implications such as increased interest rates, inflation, and debt burdens must be carefully managed. Policymakers should consider strategies that promote growth without excessively expanding deficits, ensuring fiscal responsibility in the face of economic challenges.

References

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• Mankiw, N. G. (2021). Principles of Economics (9th ed.). Cengage.
• Krugman, P., & Wells, R. (2018). Economics (5th ed.). Worth Publishers.
• International Monetary Fund. (2022). Fiscal Policy and Debt Sustainability. IMF Publications.
• Congressional Budget Office. (2023). The Budget and Economic Outlook. CBO Reports.
• Carles Boix & Michael C. Stokes (2020). Economic Policy and Democratic Governance. Cambridge University Press.
• Barro, R. J. (1979). On the Determination of the Public Debt. Journal of Political Economy, 87(5), 940-971.
• Ricardo, D. (1817). Principles of Political Economy and Taxation. John Murray Press.
• Selgin, G. (2014). The Economics of Central Banking. Liberty Fund.
• Stiglitz, J. E. (2010). Freefall: America, Free Markets, and the Sinking of the World Economy. W. W. Norton & Company.