Explain why a government budget deficit is likely to stimulate economic growth.

Here we are looking at macroeconomics.

A budget deficit means that Government spending (G) is greater than Tax revenue the government receives (T). This means there are more injections into the economy than withdrawals out of the economy. A budget deficit is likely to boost AD as AD=C+I+G+(X-M)

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Answered by James B. Economics tutor

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