1. Do Now: Why do governments borrow money? Relate government savings to the loanable fund market?

2. 1) What is the expenditure approach equation for calculating GDP? 2) What is the equation for national savings? 3) What is the equation for determining public savings?

3. T = Net Taxes How could net taxes increase? (be specific – include all possible scenarios) How could net taxes decrease?

4. How could an increase in net taxes help to stimulate the economy?

5. G = government spending What is included in government spending as defined by the expenditure approach to GDP? What is not included?

6. How could an increase in Government spending stimulate the economy?

7. Deficits and the loanable funds markets Draw and label the supply and demand curves for loanable funds How would a decrease in public savings (increased deficits) affect the loanable fund markets? How would this affect Investment?

8. Debt Story Article: What is the relationship between debt/loans and economic growth? According to the author, when does debt become a problem? What does he view as the solution to the sovereign debt crisis in Europe?