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IDU_Project_Economy

Financial Crisis – Will the growing national dept on local economies have a disastrous effect on people’s lives?
by

Andrea Cardenas

on 10 June 2011

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Transcript of IDU_Project_Economy

FINANCIAL
CRISIS Will the growth of national debts Europe and the United States are places with serious economic issues.
Will growing national debts of Europe and the U.S. affect their economies and living standards? Economic crisis is a very complicated and very dangerous subject. It can be a crisis in many parts of the world. National
Debts The total amount of money that a country's government has borrowed, by various means. This can be measured in relation to GDP The revenue or income of a country per year. It is the total value of goods produced and services provided in a country during one year FOR EXAMPLE: The United States national debt is $14.4 trillion, and it is still getting worse. The problem is that it owes a lot, so much, in fact, that for the U.S. to pay its debt, each U.S. citizen has to pay about $52,000. How and Why Does This Happen? WHY HOW *Any loan comes with an interest, and in these cases they are pretty high in order to force the nation to repay it as fast as possible. Therefore the debt increases. * If taxes are raised, then prices will rise, devaluing the currency ($,E).
* Investors throughout the world affected.
*Living standards decrease.
*Companies forced to raise salaries.
*Unemployment. *High national debts can lead to the increasing of taxes, or the introduction of new ones. * If taxes are raised due to a national debt, fewer companies will be willing to invest and grow in the country, due to the high taxes. How Can We Solve It? *In order to significantly reduce the debt, the labor does not rest only on one or even a few individuals, but a massive, organized and cooperative effort. What is needed is the country's general progress. Greece has a public debt of 133.3% of GDP. Because of that, each Greek citizen would have to pay about $33,800 each! in local economies have a disastrous effect on peoples' lives? *High national debts can stop the country from building public facilities or investing for the general welfare. In orer to save money. The Consequences Research Questions What might be some ideas to
solve the problem? Which are
most reliable? Are they possible? *Another step that could be taken is to expand the variety of people that are taxed. As well as this, taxes can be raised, although this often upsets the citizens. As this is often already done, it can only be used so much until it causes conflict. That could include things like riots, protests, etc. Some examples of how a national debt could impact someone directly: *Higher taxes. *Reduced benefits/programs. Social Security, financial aid, or medical care may be affected, because of the lack of money GDP = Gross Domestic Product *Higher interest rates. *A Weaker Currency. When the government wants to pay the National Debts, the value of the money may go down, therfore the debt is cheaper. *Higher Inflation. The high inflation will weaken the value of the curency, causing everything to be more expensive, and therfore, the living standards will go down. When the government borrows money, then the interest rates go up. This makes all the lending products more expensive. The government will raise taxes to avoid being broke. This is because the difference between the spending and public income is too much. BY:
Andrea Cardenas
Alex Apt
Joaquin Scokin
Alex Lopez WHY should we
fix it? HOW? How? why? Affects EVERYONE Living Standards go down Stop development of affected country THANK YOU FOR WATCHING *In addition this problem can be solved by selling governmental companies to private investors. With this you can maximize your revenue. EX: Spain is selling the lottery. By maximizing the exports. Increase of poverty *Another way to revet this situation is by incentivating companies to develop with in the indebted country for a future benefit. They can be atracted with a "tax incentative", this means that they are free of taxes for a few years. GDP = Gross Domestic Product By generating jobs. By reducing the imports. Inestrors,
Private Companies,
and other governments Bigger Workforce =
More Money $$ Mainly affect the lower class *Less Public Facilities (Public shcools and hospitals)

*Less jobs (construction) Less Spent on Public Facilities and more on Paying to loan. Improve the General Welfare.

Decrease poverty (more jobs) HELP THE DEVELPMENT OF A COUNTRY AN INTRODUCTION The problem is... when paying the debt taxes raise Lower Living Standard Inflation FOR EXAMPLE... USA and China 3 years ago... Every country owes something the problem is... when governments are in desperate situations... they repay their bills but not at 100% for example, Argentina in 2005 Loans Investment in national projects war NATURAL DISASTERS Economic Crisis Devaluation of currency Inflation a solution may = a new problem
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