In The Budget Balance powerpoint, I pointed out that the real economic sacrifice imposed on the country by government borrowing could be zero – or it could be substantial – depending on what the government does with the money. In the article, “Entitlements, Public Investment, and the Changing Nature of the U.S. Government,” on Tim Taylor’s blog, Conversable Economist, we find that ‘what the government does with the money’ has been changing over time in a consistent manner. I want you to consider three points related to that article: 1. How has the composition of government spending changed since the 1960’s? Support your answer with examples from the article. 2. Then explain how the various categories of federal government spending (such as spending on entitlements, or infrastructure or basic research) qualify as either consumption or investment spending. In your answer, be sure to define the terms ‘consumption’ and ‘investment.’ 3. Explain how the changing pattern of government spending affects the real economic burden of the national debt. (See The Budget Balance powerpoint in the Writing Assignment #4 folder on Blackboard. (Two paragraphs) Here’s the URL for the article in case the link doesn’t work for you: http://conversableeconomist.blogspot.com/2012/08/entitlements-public-investment-and.html
