Download Chapter 17: Federal Deficits, Surpluses, and the National Debt

Chapter 17: Federal Deficits, Surpluses, and the National Debt
LEARNING OBJECTIVES
The steps to achieve the learning objectives include reading sections from your textbook and the
“causation chain game,” which is available directly on the Tucker web site. The steps also include
references to “Ask the Instructor Video Clips,” the “Graphing Workshop” available through
CourseMate on the Tucker website.
#1 - Know the major steps in federal budgetary process.
Step 1
Read the subsection in your textbook titled “Federal Budgetary Process.”
Step 2
Play the “Causation Chains Game” titled “Major Steps in the Federal Budgetary
Process.”
The Result
Following these steps, you have learned the federal budgetary process.
#2 - Understand financing the national debt and arguments concerning who bears the burden of the
national debt.
Step 1
Read the sections in your textbook titled “Financing the National Debt” and subsections
titled “Can Uncle Sam Go Bankrupt? and “Are We Passing the Debt Burden to Our
Children?”
Step 2
Listen to the “Ask the Instructor Video Clip” titled “How Big Is the National Debt?”
You will learn how the national debt is financed.
Step 3
Listen to the “Ask the Instructor Video Clip” titled “Should We Amend the Constitution
to Require a Balanced Budget?” You will learn different views concerning the issue
balancing the federal budget.
The Result
Following these steps, you have learned that the U.S. Treasury issues government
securities to finance deficits that increase the national debt. The burden of the debt
involves two controversial issues: (1) Can Uncle Sam go bankrupt? and (2) Are we
passing the debt burden to our children?
#3 - Explain the meaning of crowding out.
Step 1
Read the subsection titled “Does Government Borrowing Crowd Out Private-Sector
Spending?”
Step 2
Listen to the “Ask the Instructor Video Clip” titled “What Is Fiscal Policy All About?”
You will learn the problems of using fiscal policy to stabilize an economy, including
crowding out.
Step 3
Listen to the “Ask the Instructor Video Clip” titled “What Is ‘Crowding-Out’ and Is It
Important?” You will learn how spending and borrowing by the government can cancel
spending in the private sector.
The Result
Following these steps, you have learned that crowding out is a reduction in private sector
consumer spending and investment because federal government borrowing to finance its
deficits increase interest rates.
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