Understanding the discipline - American Economic Association Assignment

Running head: ECONOMICS
Economics
Name of the Student
Name of the University
Course ID

ECONOMICS1
Table of Contents
Question 1........................................................................................................................................2
Question 2........................................................................................................................................5
Question a....................................................................................................................................5
Question b....................................................................................................................................6
References........................................................................................................................................7

ECONOMICS2
Question 1
Government budget deficit reflects a situation where expenditure incurred by government
is above the revenue. Higher amount of deficit enables a redistribution of income across
generation. When spending exceeds today’s revenue then this shows a welfare for today. The
next generation however have to pay for it. To benefit the economy the extra spending needs to
be spent on welfare of next generation such as building schools and hospitals. Most of the
developed countries usually run with a government deficit but still maintains a good economic
health.
Table 1: General government budget balance for advanced economies
(Source: imf.org, 2019)
The table above shows deficit in government budget as percentage of GDP. Most of the
advanced countries of the world experienced deficit in the government budget. The composition
of government spending determines their economic success. For example, in United State the
single biggest component of government spending is education which not only includes support
to school education but also extended support to college and university education.