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

When there is a government budget deficit it means that the government spending is greater than the government revenue, hence there is more money being channeled into the economy. This money can be used to invest in transport or infrastructure and so stimulating economic growth as increased jobs and opportunities arise.

HC

Related Economics GCSE answers

All answers ▸

Explain why demand for food is relatively price inelastic?


Why might expansionary demand side policies not always be effective in promoting economic growth?


What is the difference between the long run and short run Phillips curves?


What is excess supply?