7. A widely used measure of fiscal health is the debtGDP ratio. This number can remain stable...
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7. A widely used measure of fiscal health is the debt–GDP ratio. This number can remain stable or fall even in the face of moderate budget deficits if GDP rises over time.
However, a stable debt–GDP ratio may give a misleading impression that all is well because modern governments often have large implicit liabilities. The largest implicit liabilities of the U.S. government come from Social Security, Medicare, and Medicaid, the costs of which are increasing due to the aging of the population and rising medical costs.
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Essentials Of Economics
ISBN: 9781429218290
2nd Edition
Authors: Paul Krugman, Robin Wells, Kathryn Graddy
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