Overview
Government budget deficits occur when a government's spending exceeds its revenue, leading to borrowing and increased national debt. Understanding the causes and consequences of budget deficits is crucial for grasping how fiscal policy impacts the economy. While deficits can stimulate growth in the ...
Key Terms
Example: The government created a budget to manage its spending for the year.
Example: The country engaged in deficit spending to fund infrastructure projects.
Example: The national debt has increased due to years of budget deficits.
Example: The government adjusted its fiscal policy to stimulate economic growth.
Example: High budget deficits can lead to inflation if not managed properly.
Example: Budget deficits can lead to higher interest rates as the government borrows more.