Question

DISCUSS EFFECT OF A BUDGET?

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Answer 1

Answer:

Increased aggregate demand (AD)

Increased aggregate demand (AD)A budget deficit implies lower taxes and increased Government spending (G), this will increase AD and this may cause higher real GDP and inflation.

.Rise in national debt

.Higher debt interest payments

.Increase in Aggregate Demand (AD)

.Possible increase in public sector investment

.May cause crowding out and higher bond yields – if close to full capacity

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Answer 2

Increased aggregate demand (AD)

A budget deficit implies lower taxes and increased Government spending (G), this will increase AD and this may cause higher real GDP and inflation.

What budget means?

Ans = A budget is an estimation of revenue and expenses over a specified future period of time and is usually compiled and re-evaluated on a periodic basis. Budgets can be made for a person, a group of people, a business, a government, or just about anything else that makes and spends money.