Fourth-quarter GDP Up 2.1%

February 4, 2020

Fourth-quarter GDP rose only 2.1%

Questions

1. According to the news article, did investment and government expenditure increase or decrease during the fourth quarter of 2019?
2. The news article tells us that in 2019, the government budget deficit exceeded $1 trillion. What is the effect of this deficit in the loanable funds market?
3. Explain how the government budget deficit creates a crowding-out effect.
4. How would a partial Ricardo-Barro effect change your answer to #3?
5. Draw a diagram to show the effect of the government budget deficit on the loanable funds market.