Do Now:

1
Do Now

• Why do governments borrow money?
• Relate government savings to the loanable fund
  market?

2
1) What is the expenditure approach equation for
calculating GDP?2) What is the equation for
national savings? 3) What is the equation for
determining public savings?
3
T Net Taxes

• How could net taxes increase? (be specific
  include all possible scenarios)
• How could net taxes decrease?

4

• How could an increase in net taxes help to
  stimulate the economy?

5
G government spending

• What is included in government spending as
  defined by the expenditure approach to GDP?
• What is not included?

6

• How could an increase in Government spending
  stimulate the economy?

7
Deficits and the loanable funds markets

• Draw and label the supply and demand curves for
  loanable funds
• How would a decrease in public savings (increased
  deficits) affect the loanable fund markets?
• How would this affect Investment?

8
Debt Story Article

• What is the relationship between debt/loans and
  economic growth?
• According to the author, when does debt become a
  problem?
• What does he view as the solution to the
  sovereign debt crisis in Europe?