Explain why a government budget deficit is likely to stimulate economic growth.
Here we are looking at macroeconomics.
A budget deficit means that Government spending (G) is greater than Tax revenue the government receives (T). This means there are more injections into the economy than withdrawals out of the economy. A budget deficit is likely to boost AD as AD=C+I+G+(X-M)
JB
Related Economics GCSE answers
All answers ▸Explain why income tax in the UK is an example of progressive taxation?
Explain what is meant by a negative externality and give an example of a negative externality that arises from fuel consumption.
Assess the impact of minimum wage legislation on a developing economy.
Explain what a supply shock is, using a relevant example.