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Teaching budget deficits and the national debt

Jim Riley

28th November 2011

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The impact of budget deficits on the national debt are to economics what cash flow forecasts are to business studies ie a source of great confusion between students who can struggle with stock and flow concepts.

One teaching tactic is to keep it simple. I use a basic, made-up set of data to finesse a better understanding of the subtle interaction between fiscal positions and the national debt.

Then I contrast two scenarios: zero and 2.5% pa economic growth to highlight why a recession makse the task of reforming public finances so much more challenging

The graphics are on the next page…

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Jim Riley

Jim co-founded tutor2u alongside his twin brother Geoff! Jim is a well-known Business writer and presenter as well as being one of the UK's leading educational technology entrepreneurs.

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