Deficit and Surplus

In: Other Topics

Submitted By dpetite86
Words 466
Pages 2
Why the U.S.’s deficit, surplus and debt have an effect on a domestic automotive manufacturing (exporter) and The United State’s financial reputation on an international level

The United States financial reputation on an international level
The new economic cycle; 2000 to 2001 the United States economy has gradually dropped. This dropped occurred before September 11, 2001 terror attack and continued during the international financial crisis. The United States is struggling with the fundamental or comprehensive which has hinder the strength of the United States. One major problem is the fiscal and trade deficits. "In 2010, the fiscal deficit in the United States was $1.3 trillion or approximately 9 percent of U.S. GDP" (The Brookings Institution.) The budget deficit and debt limit the resources to spend on production and investment. Similarly, the impact of imported products on employment in the United States is not as much as great as some sensational arguments might make it appear. This is because most products imported by the United States are not produced by the United States, or are produced by the United States in a quite small amount.
A domestic automotive manufacturing (exporter)
The U.S. current account goods and services trade deficit which is balanced by our foreign investment surplus. Trade just means exchanging in which when we export fewer foreigners then they export to us. In all actually The U.S. could be getting compensate for that. By exporting less than we import the U.S. possibly could be gaining more assets such as financial assets short or long term. However, the trade deficit causes our foreign investment surplus and could result from the foreign investment surplus. The trade deficit and investment surplus are determine varies depending on people who choose to export, import and invest. When exports are greater than imports, the nation…...

Similar Documents

Budget Deficit

...Implications of Budget Deficit in India When a government plans to spend more than its income, it resorts to financing the additional spending through a budgetary deficit. So, traditional definition of a budget deficit is the difference between total government outlays and the revenue receipts. But a complete and technical definition of deficit would be 'the difference between size of the government debt at the end of the year and the corresponding size of the debt a year later. Thus, the budget deficit is funded by a national debt. A healthy practice for any government is to have a balanced budget, but Keynesian economists propose deficit budgeting to overcome a financial crisis. Even with deficit budgeting, the healthy way is to have revenues exceeding non-interest outlays and this excess must be good enough to pay for the interest on government debt to avoid a rising ratio of debt to GDP. In case of India with a 210 billion dollar budget, its deficit pegs at about 6.8 percent of GDP, and when combined with those of state governments, it reaches a hefty figure of 10 percent of the GDP. Comparatively, leading countries of the world work with an average budget deficit of 4 percent of their respective GDPs. India borrows about 10 percent of its GDP every year. With current debt on India being about 75 percent of its GDP, it is required to pay a heavy interest on the borrowings. Implications of heavily deficit budgets in India are - Economic growth in...

Words: 401 - Pages: 2

Surplus Deficits

...Surplus Deficits ECO/372 September 10, 2010 Surplus Deficits A surplus in this economy can be beneficial to many businesses and as a whole society as well. A surplus benefits out society when producers and consumers sell their goods or services to the public. It is known that economic surplus is made up of two parts which are producers and consumer surplus. The producer surplus is the benefit that it receives from doing their service to the public at whatever the market price is at that time, rather than selling their services at a much cheaper rate. A consumer surplus is very different and opposite of that of a producer surplus. A consumer surplus is the benefit that it receives from purchasing their services from the public where they would be willing to pay more for the service they purchased. A government budget surplus can be very beneficial to the economy. A government budget surplus can be beneficial in that it gains revenue through taxes and other fees associated with the surplus. A budget surplus does have its effect on the economy in how the government officials use their funds. Two periods in time that comes to mind where the United States had to run their budget surpluses is the War in Iraq from 2003 to 2011, and the September 11th, 2001 attacks in New York at the World Trade Center. According to “A History of...

Words: 728 - Pages: 3

Deficit and Surplus

...Why the U.S.’s deficit, surplus and debt have an effect on a domestic automotive manufacturing (exporter) and The United State’s financial reputation on an international level The United States financial reputation on an international level The new economic cycle; 2000 to 2001 the United States economy has gradually dropped. This dropped occurred before September 11, 2001 terror attack and continued during the international financial crisis. The United States is struggling with the fundamental or comprehensive which has hinder the strength of the United States. One major problem is the fiscal and trade deficits. "In 2010, the fiscal deficit in the United States was $1.3 trillion or approximately 9 percent of U.S. GDP" (The Brookings Institution.) The budget deficit and debt limit the resources to spend on production and investment. Similarly, the impact of imported products on employment in the United States is not as much as great as some sensational arguments might make it appear. This is because most products imported by the United States are not produced by the United States, or are produced by the United States in a quite small amount. A domestic automotive manufacturing (exporter) The U.S. current account goods and services trade deficit which is balanced by our foreign investment surplus. Trade just means exchanging in which when we export fewer foreigners then they export to us. In all actually The U.S. could be getting compensate for that. By exporting less...

Words: 466 - Pages: 2

Twin Deficit

...Twin Deficit For the past 2 years, India has been fighting slow growth, high inflation and the twin deficits – fiscal deficit and current account deficit. The current account deficit reached the peak of 5.3% of GDP in Q1 FY13 which is much beyond the comfort zone of 3%. The fiscal deficit has also proved difficult to control, leading to a large part of borrowing going into servicing the debt rather than towards capital intensive activities. Off late the threat of being relegated to the status of junk bonds has made the government to swing into action and try and take steps to curb the deficits. It is the result of these measures that the fiscal deficit is not expected to go much beyond the government target of 5.3% of GDP. As a part of its efforts, government has also come up with the target of reducing the fiscal deficit to 3% of GDP by 2016-17. In order to rein in on the fiscal deficit, under the direction of Finance Minister, government managed to cut expenditures to the tune of Rs.80000 crores. Besides this, unlike previous years government has managed to keep its stake selling program on track, which is expected to result in the revenue receipts of about Rs.30000 crores. However, the government has also been cutting corners and using financial jugglery to cuts the deficit. Transferring the subsidy payment bills onto the next year and one time receipts from stake sale in PSUs are not effective and long term solution. Apart from this, losses like those of State...

Words: 529 - Pages: 3

Consumer Surplus and Producer Surplus

...Consumer Surplus and Producer Surplus Consumer Surplus – Difference between what the consumer is willing to pay for an additional unit of a product or service and its market price. Producer Surplus - Difference between what producers receive for an added unit of a product, and the marginal cost of producing it. For example Mr. ‘A’ wishes to buy CDs. The consumer surplus for Mr. A (an individual) in the CD market is: Price Mr. A’s Demand for CDs Shaded area is Mr. A’s consumer surplus P* Market Price DV=MBV QV* Q The surplus of all consumers is simply the sum of all consumers’ surpluses. For instance total consumer surplus in the market for apartments Price Market Demand for Apartments Shaded area is consumer surplus for all consumers P* Market Price DM=MBM Q* Q Similarly, we can see producer surplus in the apartment market below: Price Market Supply for Apartments SM =MCM P* Market Price Shaded area is producer surplus for market Q* Q In this example, one person may be willing to rent their 1st apartment for $200. Since...

Words: 2554 - Pages: 11

Surplus

...The United States is still behind by many jobs compared to when the Great Recession started, also there are less people employed than there were in 2001. America’s enormously large trade deficit that was caused by the disastrous economic policy, the economy has not been able to generate sufficient new jobs to upsurge employment. The trade policy has stimulated our nation’s industries to relocate their manufacturing of merchandise to other country and doesn’t fine them for trading the exact identical merchandise back to the U.S. has cost the U. S. millions in lost jobs and money (Moreland, 2012). University of Phoenix student According to Loans and the deficit The University of Phoenix student was affected in a major way. ” In 2010, the Student Aid and Fiscal Responsibility Act eliminated bank-based lending entirely, for a savings of about $67 billion in subsidies over 10 years. While about two-thirds of that revenue went to increasing the Pell Grant to its current $5,550 maximum level, about $20 billion was redirected to reduce the deficit. Nelson (2011)”. Current statistics demonstrate that the U.S. showed a strong skill surplus of lots of money in the education region to the sum of 12.6 billion. This happens when University students such as group B” attends the University of Phoenix. Regardless of the effects of the current international economic hold up, a diffident increase in this imperative region is foreseen. United States revenue from University of Phoenix...

Words: 625 - Pages: 3

The Effects of Running a Surplus or Deficit Budget

...| The Effects of Running a Surplus or Deficit Budget | ECO 372 | The current state of America’s fiscal policy is of major concern for the majority of the populace with the constantly increase of health care, gas, home interest rates, and staggering unemployment number, some are wondering if this nation will survive. Even many fiscal experts are forecasting that The United States is on road to fiscal disaster which seems to confirm the fears of the nation. Compounding the problems is an elderly populace and increasing deficit problem, a growing segment of government spending apportioned to interest expenditures and entitlements for the upcoming years resulting in plunging government's prolific investments and pushing out private shares. The deliberation of this paper is centered on how and why the U.S.’s deficit, surplus, and debt influences on the taxpayers, impending social security and Medicare users, the unemployed, University of Phoenix students, America’s financial reputation on a global scale, national (export) automotive manufacturer, Import of Italian clothing company, and gross domestic product (GDP). The near term objectives of the paper to convey information as complete glaze of US fiscal policy and how the current fiscal policy influences the nation. American taxpayers play a major role in the economy; this is why there is so much commotion about the millions of immigrants who do not pay taxes. The role of a taxpayer and the role of the economy go...

Words: 1498 - Pages: 6

Employee Surplus

...Employee Surplus Agenda  Introduction  Problem  Alternatives  Implementation  Timeline Problem  Decrease in sales revenue  Abundance of qualified employee Possible Solutions  Reduce Hours  Hiring Freeze  Voluntary Separation  Reduction in Force (RIF) Reduce Work Hours- Pros  Reduces labor cost  Able to retain all qualified employees  Easy to introduce Reduce Work Hours- Con  May reduce employee motivation  Skilled employees may leave company  Lowers productivity Hiring Freeze - Pros  Encourages personal skill building  Protects current employees from layoffs  No additional company expense Hiring Freeze - Cons  Reduces possible future productivity  Reluctant employees lack of enthusiasm  Does not reduce compensation cost Voluntary Separation- Pros  Attractive separation package  Reduces long term payroll cost  Less disgruntled employees  Minimize legal risk Voluntary Separation- Cons  Increased short term cost  Qualified employees may leave  Must fill vacant positions RIF - Pros  Reduces long term employee cost  Able to focus on most profitable line of business  Reduces short term payroll cost RIF - Cons  Bad publication  Does not increase revenue  Possible legal risk Best Solution - Combination  Step One – Implement hiring freeze  Step Two – Offer voluntary separation  Step Three – Downsize (if necessary) Month One - Preparation Determine the desired number of...

Words: 555 - Pages: 3

Consumer Surplus

...Consumer Surplus [pic] When analyzing changes to a consumer optimum given changes in the market price of a particular commodity, we often speak of the consumer being better or worse off. What is missing in this analysis is the ability to quantify changes in individual satisfaction due to these price changes. One method used to measure these welfare changes is through the use of a concept known as Consumer Surplus. This method compares the value of each unit of a commodity consumed against the price of that commodity. Stated differently, consumer surplus measures the difference between what is person is willing to pay for a commodity and the amount he/she actually is required to pay. Consumer demand is a measure of willingness to pay. As shown in the diagram below, consumers often value each additional unit consumed less that previous units (i.e., the concept of diminishing marginal utility). For example, suppose that the good in question is monthly consumption of gasoline. Based on the data in the diagram below (left), the consumer would be willing to pay $9 for the first gallon rather than to without. This first gallon would be used for essential driving activities. Each successive gallon has a value to the consumer of $1 less than previous units (2nd gal = $8.00, 3rd gal. = $7.00, and so on) as needs are met and the consumer engages in driving more for pleasure and sight-seeing. The value that the consumer places on each gallon (unit) consumed is summarized by the...

Words: 1700 - Pages: 7

Consumer Surplus

...Consumer Surplus in the Digital Economy: Estimating the Value of Increased Product Variety at Online Booksellers Sloan School of Management, Massachusetts Institute of Technology, Cambridge, Massachusetts 02139 Sloan School of Management, Massachusetts Institute of Technology, Cambridge, Massachusetts 02139 The Heinz School of Public Policy and Management, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213 erikb@mit.edu • yuhu@mit.edu • mds@cmu.edu Erik Brynjolfsson • Yu (Jeffrey) Hu • Michael D. Smith W e present a framework and empirical estimates that quantify the economic impact of increased product variety made available through electronic markets. While efficiency gains from increased competition significantly enhance consumer surplus, for instance, by leading to lower average selling prices, our present research shows that increased product variety made available through electronic markets can be a significantly larger source of consumer surplus gains. One reason for increased product variety on the Internet is the ability of online retailers to catalog, recommend, and provide a large number of products for sale. For example, the number of book titles available at Amazon.com is more than 23 times larger than the number of books on the shelves of a typical Barnes & Noble superstore, and 57 times greater than the number of books stocked in a typical large independent bookstore. Our analysis indicates that the increased product variety of online bookstores...

Words: 10789 - Pages: 44

Deficit Spending

...The idea of deficit spending in America is a topic that sparks great controversy and debate, especially with the recent recession. There are many reasons for and against government spending more than it can afford. Some say that it is an ineffective way of dealing with financial issues, as the long-term issues it causes devastates the country. Others believe that it is essential in period of budget deficits and the effects of spending are necessary to rejuvenate the economy. Overall, the huge debt it creates for the government, as well as the impact it has on future generations make deficit spending a practice that can seriously cripple the country’s government. The initial issue deficit spending causes is a large increase in the country’s debt. By definition, deficit spending is spending more money than is being taken in. This will cause even greater debt, as deficit spending is most commonly used in times of recession. In fact, deficit spending with the Recovery and Reinvestment Act in 2009 resulted in over 500 billion more dollars in debt for America. This money has to come from somewhere, and since America already had debt, they had to get loaned more money from other countries. Deficit spending does the exact opposite thing of its purpose: it increases debt. Deficit spending increases an already enormous debt, and its repercussions last for several generations. After long periods of deficit spending take place, the debt accumulates to huge levels, and as a...

Words: 531 - Pages: 3

Surplus

... Own Price Elasticity of Supply c. Calculate Qd and Qs at the $4.50 price Qd = 1600 - 125(4.5) Qd = 1037.5 Qs = 440 + 165(4.5) Qs = 1182.5 surplus = Qs - Qd = 1182.5 - 1037.5 = 145 The support price would create an excess supply of 145 million bushels that the government would be forced to buy. 7. The current price charged by a local movie theater is $8 per ticket. The concession stand at the theater averages $5 in revenue for each ticket sold. At the current ticket price, the theater typically sells 300 tickets per showing. If the theater raises ticket prices to $9, the theater will sell 270 tickets. What is the price elasticity of demand at $8? What happens to ticket revenue if the theater increases ticket prices to $9 from $8? What happens to concession revenue if the theater increases ticket prices? If the theater wants to maximize the sum of ticket and concession revenue, should they raise ticket prices to $9? Solution: The price elasticity of demand at $8 is Initially, ticket revenue is P*Q = $8(300) = $2,400. If ticket prices are raised to $9, ticket revenue becomes P*Q = $9(270) = $2,430. Thus, if ticket prices are raised to $9, ticket revenue increases by $30. At $8, the concession stand will average $1,500 per movie showing. If ticket prices are raised to $9, the concession stand will average $1,350. Thus, concession stand revenues will fall on average by $150. If the theater wants to maximize the sum of ticket and concession revenue,......

Words: 3572 - Pages: 15

Usa Deficit

...Maria Tovar Trade Surplus and Trade Deficit China overtakes USA as worlds trading partner China´s Trade Surplus Vs. USA´s Trade Deficit Countries that have open economies are those who carry out economic activities with other countries and trade goods and services. Countries can export, which means selling domestic goods and services to another country or they can import, which means buying goods and services from another country. An economic surplus makes reference to having a positive balance of trade; when a country´s exports exceed its imports. On the other hand, a trade deficit is when a country´s imports exceed its exports and has a negative commercial balance. As the video: “China overtakes USA as a world´s trading partner,” suggests, China currently has a trade surplus. Between 2000-2008 China´s imports have grown 403% whilst its exports have grown 474%. China´s exports are currently higher than its exports due to its economic strategy, which will be explained below. The video explains why China has overtaken the US as world´s trading partner, and thus why China has a trade surplus and the US a trade deficit. American and many other companies are now producing and assembling their products in China due to the low manufacturing costs in this country. It is more profitable for American companies to produce and assemble their products in China not only for the low labor costs, but also for the low transport costs. Even though this harms the US´s economy...

Words: 1172 - Pages: 5

Deficit Leadership

...Topic: One of the major challenges facing Malaysia today is lack of leadership. Discuss this statement and include in your discussion the factors behind this leadership deficit. 1.0 Introduction These decades, there are many challenges facing by Malaysia that need to be handle effectively in order for Malaysia to achieve its vision on 2020. Recently, the latest issue in Malaysia that got concern not only by Malaysian but also international community are ‘I want to touch a dog’ programme, Selangor MB crisis, changing Malaysian education system, GST (good and service tax) implement on 2015, lost of MH370, MH 17 incident and many more. These showed that Malaysia has lack of leadership in term of emotion awareness, lack of communication skill, information and knowledge and much more. Lack of leadership is one of the major challenges for Malaysia because an effective leadership are needed to handle these entire problems effectively. However, Malaysia undergo leadership deficit. Maintaining the political peaceful, economic growth, multi-ethnic citizen and develop higher education are examples of another challenges for Malaysia to manage nowadays. The concept of leadership is quite unclear and it is different from concept of management but both are important. According to Jackson (1993), leadership can be define as thought of as belonging to the individual rather than given by virtue of his or her position in organisational which can be seen as an ability to motivate others...

Words: 2868 - Pages: 12

Surplus Funds to Riches

...The Gold Mine Version 2.1 Your Step by Step System for Finding, Securing and Obtaining Surplus Funds From Mortgage Foreclosures, Tax Sales, Unclaimed Estate Monies, and Bankruptcy Courts. **Please NOTE – the Videos that will help you understand the written information that follows are now all on one page with titles describing what they address. Please be sure to check those videos out at http://www.surplusfundsriches.com/coursevids.htm YOUR BROWSER MUST BE OPEN IN THE BACKGROUND FOR THIS TO WORK! If you’re internet browser is open in the background while you are reading this, you can click the above link and go straight to the page. If not, cut and paste it into your browser. WATCH AT LEAST THE INTRODUCTORY – FIRST – VIDEO PLEASE! Also – if you are going to function as a researcher, using our funding, you are responsible for using this book to get the list of monies held, doing the research as outlined in the pages that follow, and sending that information in. The last part of this portion of the book has the Independent Contractor’s Agreement, the Referral Form and additional information. You do not do the negotiations or contact the individuals if you wish to function in this capacity. Please, before you ask for help on acquiring a list, follow directions to do so with the emails to the bookkeepers. GETTING THE LIST IS PRIORITY – USE THE VIDEO LINK ABOVE TO WATCH VIDEOS, IN ADDITION TO READING THIS BOOK! Finally, I get a lot of calls regarding new statutes/laws passed in...

Words: 38118 - Pages: 153