¶ … Macroeconomics
Discuss within your Learning Team how and why the U.S.'s deficit, surplus and debt have an effect on the following: The United States' financial reputation on an international level
The United States' fiscal position will have an impact on confidence. This is because the underlying levels of the trade deficit, surplus and the debt will affect consumers and businesses perceptions of the future. When this happens, there will be changes in the overall amounts of economic activity that are occurring. (Masters, 2012)
For example, after the end of World War II, America's debt levels were at 122% of GDP spending. The tremendous amounts of exports overseas (between: 1946 to 1976) set the stage for the country to realize massive trade surpluses. This caused the national debt to decrease from 122% to 40%. During this time, the U.S. became the most dominant economic power in the world. (Masters,...
economy. For the next thirty years, a long period of economic growth gradually brought the debt down as a percentage of GDP despite wars in Vietnam and Korea and the establishment of two federal entitlement programs, Medicare and Medicaid. In their first year (FY 1967), spending for both programs amounted to just 0.5% of GDP." (Masters, 2012)
This is illustrating how the large budget surpluses improved America's financial reputation on the international level. Once this occurred, is when there was an increase in the standard of living for most people inside the United States. It is at this point that other countries began to work closely with the U.S. In order to realize similar benefits for themselves. This helped to…
