Principles of Macroeconomics: “Chapter 12, Section 1: Government and the Economy”

• Read this section, which elaborates on the major components of government spending and the sources of government revenue. You will also learn about the terms budget surplus, budget deficit, balanced budget, and national debt. As you read, note the trends in the US government’s budget over time. Lastly, attempt the “Try It” exercises at the end of the section.

Wikipedia: “History of the United States Public Debt”

• Read this article, which covers several aspects of how the national debt in the US grew including the major contributions that stem from spending on wars and issues related to national defense.

Wikipedia: “Government Debt”

• Read this article, focusing your attention on the “Implicit Debt” section. Among the interpretations to be gleaned from this reading are the facts that government can be the largest borrower, which drives interest rates higher than otherwise; other borrowers become reluctant to seek loans; and future generations inherit the debt without clarity regarding the associated benefits. You can probably come up with some interpretations on your own accord.

Wikipedia: “External Debt”

• Read this article, which covers several aspects about who outside of a country owns the nation’s debt. Entities outside a country lend money to a government or other entity within a country. As debt is handled, principal and interest is paid and sometimes debts are forgiven or eliminated.