Do households generally make a distinction between spending for current expenses and spending for capital expenses? Compare borrowing $5,000 to take a vacation in Hawaii with borrowing $125,000 to buy a condominium and move out of your rented apartment. Explain.

Monetary Policy

Description

Research domestic taxation on the Internet. Write a two- to three-page paper in APA Style analyzing the national debt, deficits, and federal operating and capital budgets.

Consider the following to guide your research and writing.

Who is responsible for U.S. monetary policy and what are the roles of the Federal Reserve (the Fed), Congress, and the president?

What role does the Fed play in our national debt and federal deficit?

How is our fiscal policy going to affect future generations?

Does government borrowing crowd out private-sector spending? Explain.

Do households generally make a distinction between spending for current expenses and spending for capital expenses? Compare borrowing $5,000 to take a vacation in Hawaii with borrowing $125,000 to buy a condominium and move out of your rented apartment. Explain.

Critics of “new accounting” for federal borrowing argue that it does not matter what the government spends the money on. What matters is the total amount that the government spends minus taxes collected. Explain this viewpoint. Do you agree or disagree? Why or why not?

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