EC2283: Chapter 30: GOVERNMENT BUDGETS AND FISCAL POLICY (a) Is it possible for a nation to run...

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EC2283: Chapter 30: GOVERNMENT BUDGETS AND FISCAL POLICY    	(a) Is it possible for a nation to run budget deficits and still have its debt/GDP ratio fall? Explain your answer.    	(b) Is it possible for a nation to run budget surpluses and still have its debt/GDP ratio rise? Explain your answer.    	A government starts off with a total debt of $3.5 billion. In year one, the government runs a deficit of $400 million. In year two, the government runs a deficit of $1 billion. In year three, the government runs a surplus of $200 million.    	What is the total debt of the government at the end of year three?

Robert · Accepted Answer

The question of who should provide the health care service to people is very difficult to answer. 
Whether health care services should be provided fully by the government or by the private 
service provider is contentious issue. There are people who argue that health a care service is 
crucial service and therefore same should be provided by the government of a country. They 
argue that health care service has positive externality and this positive externality is the basis for 
the argument of those who argue for full government role in providing health care services. A 
positive externality is the benefit received by a third party as a result of an action by another 
person and the personal who received the benefit is not directly or indirectly is involved in the 
transaction. People argue that in the presence of positive externality private service providers 
will not produce the health care service in sufficient quantities that is desired by the society or in 
socially optimum quantity. This is basis for argument for full government role in providing 
health care service to public. There are people who fully oppose government role in providing 
health care services. Instead they argue that government has no role in health care services or 
government role should be restricted to only regulating the private service providers. Economic 
efficiency will be improved if health care service is left private service providers.

EC2283: Chapter 30: GOVERNMENT BUDGETS AND FISCAL POLICY (a) Is it possible for a nation to run budget deficits and still have its debt/GDP ratio fall? Explain your answer. (b) Is it possible for a...

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