Measurement of the government budget deficit.

    Describe four problems affecting measurement of the government budget deficit. According to the traditional view of government debt, how does a debt-financed tax cut affect public saving, private saving, and national saving? According to the Ricardian view of government debt, how does a debt-financed tax cut affect public saving, private saving, and national saving? Do you find the traditional or the Ricardian view of government debt more credible? Why? Give three reasons that a budget deficit might be a good policy choice. Why might the level of government debt affect the government’s incentives regarding money creation?