Introduction to Macroeconomics

MACROECONOMIC POLICY
Issues Addressed by Macroeconomics

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The large budget deficits of the 1980s and early 1990s are unusual.

• Borrowing from the public might divert funds from more productive uses.
• Federal budget deficits might be linked to the decline in productivity growth.

The emergence of large Federal deficits in the 1980s coincided with the emergence of large trade deficits

• The Federal budget deficit and the trade deficit have been called the “twin deficits.”

Are these deficits related? If so, what can be done about them?

MACROECONOMIC POLICY
Issues Addressed by Macroeconomics