Question

How budget deficits and national debt are defined? Is it a good policy for the government...

How budget deficits and national debt are defined?

Is it a good policy for the government to create budget deficit? Why and why not?

Homework Answers

Answer #1

Budget deficits is difference between all receipts and expenses in both revenue and capital account of government exceeds capital receipts. it leads to capital account deficit. it is usually expressed as percentage of GDP.

National debt is the total debt, or unpaid borrowed funds carried by government, which is measured as the face value of currently outstanding treasury securitis that have been issued by the treasury and other government agencies,

these types of deficits and debts are relatively harmless, the result of such debtors tax is to reduce consumption, savings and investments so that over time, servicing interest payments on the debt effectively reduces the nations economic growth.

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