Question

what are the effects of fiscal deficit

Answer 1

When deficit is used to finance a revenue deficit, aggregate consumption increases as the government uses the money for consumption expenditure, while there is fall in investment. This will lead to decline in the GDP growth and the growth rate of economy will fall.

Answer 2

When deficit is used to finance a revenue deficit, aggregate consumption increases as the government uses the money for consumption expenditure, while there is fall in investment. This will lead to decline in the GDP growth and the growth rate of economy will fall.