The news headlines during late 2012 and early 2013 were predominantly encompassed by the numerous...

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The news headlines during late 2012 and early 2013 were predominantly encompassed by the numerous deliberations between the President of the United States of America and the United States Congress regarding how to deal with the economic situations facing the USA. The unrelenting debates concentrated on situations which included the USA’s Fiscal Cliff, Debt Ceiling and the Continuing Resolution for the Federal Government. Thus, while referencing these economic situations and the economic principles and terminology described in the course textbook, explain the difference between Macroeconomics and Microeconomics. Also explain how economics is used as a social science and as a policy tool.

Write a two-page essay in which you address the issues outlined above

Robert · Accepted Answer

The U.S economy since last 4-5 years has been in deplorable condition. Although it has passed 
the worst situations which it faced recently during the financial crisis of 2008-09 ( worst since 
the great depression), but the condition of economy still looks shaky and not very conducive to 
higher economic growth and greater economic recovery. Unemployment situation continues to 
be worrying as unemployment rate is still at around 8%. The fiscal situation continues to be 
worrying and is in worse situation as the U.S government is finding difficulty in repaying its 
dues and looking to increase the debt limit to make these outstanding payments. Given the fact 
that total national debt now accounts for about 98% of total GDP and fiscal deficit is around 8% 
of Gross domestic product (GDP), further increase in debt limit might exaggerate the situation 
and make the fiscal front further worse. There are many disadvantages of having large fiscal 
deficit and large national/public debt and therefore the economy must look to avoid high level of 
debt. The reasons for avoiding high level of debt can be listed as follows; 
1. A large public debt unnecessarily causes increase in the financial burden on the future 
generation. A loan taken today has to be repaid in future; so if a loan is taken to finance t 
public debt/deficit today, it is likely to fall on future generations. 
2. It increases the nation’s dependence on the foreign country.

The news headlines during late 2012 and early 2013 were predominantly encompassed by the numerous deliberations between the President of the United States of America and the United States Congress...

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