We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

Deficit Spending - Essay Example

Comments (0)
Within the realms of macroeconomics, deficit financing is one of the turnkey variables that help in balancing the monetary flow in any modern economy neutralizing generated deficiencies. It is basically a mechanism that remains in the hands of the government of economies for…
Download full paper
Deficit Spending
Read TextPreview

Extract of sample
Deficit Spending

Download file to see previous pages... Deficit financing has many advantages that benefit the economy in times of economic trouble but it has many disadvantages and overemphasis on it may turn hazardous for the economy.
In a modern economy, budget deficit often evolve due to some common reasons like increase in government expenditure, fall in aggregate income level, inefficiency in the tax collection mechanism, subsidies granted by government in diverse sectors of the economy and so on. All these results in diminished pool of the state exchequer causing budget deficit wherein the mechanism of budget deficit by the government make its intervention coming with its own set of advantages. As discussed earlier, with two major tools like borrowing and printing new currency, the economy experiences development in infrastructure with capital infusion which in turn propels productivity boom in essential sectors like education, medicine and real estate to name a few. Money supply within the economy increases that as a spillover effect increase price level (although inflation acts as a predicament) of the economy that fetches gains to the producers in the supply side luring investments. One of the major advantages of deficit financing is that it increases the aggregate demand within the economy increasing employment opportunities, income and thus more investments (Hajela, 2010, p. 348).
After analyzing the advantages of deficit financing, it can be stated that there are some disadvantages of it as well. Inflation is one of the most prominent disadvantage or evil effects of deficit financing. If deficit financing cannot be controlled in a proper manner then inflationary pressure will increase. As for instance, in case of production owing to excess capacity deficiency, discrepancies between demand and supply of goods within the market and shortage of complementary factors coupled with increase in money supply accelerates inflationary pressure. Apart from that some ...Download file to see next pagesRead More
Comments (0)
Click to create a comment or rate a document
Essay on budget deficit
Organisation for Economic Co-operation and Development (OECD) has predicted that government debt will increase seriously by unmaintainable levels in advanced as well as emerging economies within next 25 years.
5 Pages(1250 words)Essay
Federal Budget Deficit
It is imperative that the government’s deficit is mainly financed by borrowing from the public through selling of bonds. In addition it can b financed by borrowing from the central bank. There are diverse budgetary deficits, which include revenue, budgetary, fiscal, primary and monetized deficits (The Moment of Truth, 7).
5 Pages(1250 words)Essay
Sustainable Deficit
According to Economic Review, First Quarter 2001, “economic theory predicts that if a country experiences an investment boom as a result of increased productivity, while its trading partners do not, its current account deficit should widen.”
6 Pages(1500 words)Essay
Economics (twin deficit)
The International Monetary Fund (IMF) has too voiced its concern. The large budget deficit means that the government expenditure is much more than its income. Several major policy decisions may account for the
2 Pages(500 words)Essay
Public Spending
The public expenditure of the UK economy has increased from the year 1900 to the end of 20th century. There has been increase in the Gross Domestic Product (GDP)
5 Pages(1250 words)Essay
Second Industrial Revolution
Rothney & Findley (2011) indicate that the Second Industrial Revolution marked a transfer from manufacturing to service-based industries. The New Deal affected this shift since
1 Pages(250 words)Essay
The theory of endogenous money
According to their assumptions regarding how banking systems and monetary authorities behave, monetary economy behaves differently from real exchange economy (Keen and Grasselli, 2012:1). Despite the idea
4 Pages(1000 words)Essay
Financial deficit
On the other hand, when the overall government spending exceed total revenues for given financial year the budget has negative balance and it is called fiscal deficit. In the past, government debt had
3 Pages(750 words)Essay
Deficit Spending
Deficit spending is also one such process which many country used to adopt to tackle several economic condition. In this paper the main focus is on analyzing the positives and negatives of the deficit spending and how it generally works. Just
3 Pages(750 words)Term Paper
Deficit spending
In most cases, this is regulated through borrowing mostly from foreign governments. From an economist point of view, massive government spending stimulates economic growth. However, it leads to increased interest rates in the country. Therefore, the federal government must
3 Pages(750 words)Research Paper
Let us find you another Essay on topic Deficit Spending for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us