e read the below articles from The Economist about finance in US governments, both in state and federal
levels.
Why Joe Biden isn’t afraid of debt any more.pdf
https://www.economist.com/united-states/2021/03/29/why-joe-biden-isnt-afraid-of-debt-any-more
How some American states’ finances have survived the pandemic.pdf
https://www.economist.com/united-states/2021/04/17/how-some-american-states-finances-have-survived-thepandemic
After you read them and have a good understanding on what has been going on on the U.S. government
budget definit/surplus levels or plans, discuss about the following questions. Assume closed economy (i.e,
Y=C+I+G+NX, where NX=0)
1) What does our textbook say about the effect of the U.S. federal level budget deficit policy (i.e., T-G <0) on
the U.S. loanable market? How about the (long-run) effect on the U.S. economy?
2) Then why do you think the Biden admministration is implementing expanded budget deficit plan? What do
YOU expect the overal long-run impact of the policy to be on the U.S. economy?