Monday 16 February 2009

Budget deficit (Economic)

What is budget deficit ?
Budget deficit is when the taxation is less than government spending.
Why might a government make a budget deficit?
Because it's budget deficit ,that's means taxation less than government spending.If the taxation less
than government spending ,the aggregate demand goes up.For example , now , all over the world
we face recession, consumption decrease,leads to the aggregate demand going down,
The government in order to deal with the problem uses budget deficit, they reduce the tax,
and may give the benefits to unemployment, and make the demand go up.So if the government
spending go up that's means consumption will go up and aggregate will increase too.

1 comment:

chris sivewright said...

spell deficit correctly!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!