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
Answered by James B. Economics tutor

2939 Views

See similar Economics GCSE tutors

Related Economics GCSE answers

All answers ▸

Why are UK government gilt (bond) yields rising and why is that bad?


What are the benefits of an increase in the National Minimum Wage?


Explain one possible effect on the equilibrium market price of an increase in production costs for firms


Explain how a fall in interest rates can affect total spending in the economy.


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

MyTutor is part of the IXL family of brands:

© 2026 by IXL Learning