[Answer] Which of the following is the most likely effect of deficit spending by the government?

Answer: Private investment spending is crowded out.
Which of the following is the most likely effect of deficit spending by the government?

When the outlay of a government (i.e. the total of its purchases of goods and services transfers in grants to individuals and corporations and its net interest payments) exceeds its tax revenues the government budget is said to be in deficit; government spending in excess of tax receipts is known as deficit spending. Governments usually issue bonds to match their deficits. They can be bought by its Central Bank through open market operations. Otherwise the debt issuance can increase the level of (i) public debt (ii) privat…

Deficit reduction in the United States refers to taxation spending and economic policy debates and proposals designed to reduce the Federal budget deficit . Government agencies including the Government Accountability Office (GAO) Congressional Budget Office (CBO) the Office of Management and Budget (OMB) and the U.S. Treasury Department have reported that the federal government …

Government budget balance – Wikipedia

United States debt-ceiling crisis of 2011 – Wikipedia

Deficit spending – Wikipedia

Government budget balance – Wikipedia

Sat Jul 16 2011 14:30:00 GMT-0400 (Eastern Daylight Time) · The United States debt-ceiling crisis of 2011 was a stage in the ongoing political debate in the United States Congress about the appropriate level of government spending and its effect on the national debt and deficit .The debate centered around the raising of the debt ceiling which is normally raised without debate.The crisis led to the passage of the Budget Control Act of 2011.

In times of recession deficit spending has significant benefits whereas spending cuts by governments aggravate and lengthen recessions. To prevent that most balanced-budget provisions make an exception for times of war national emergency or recession or allow the legislature to suspend the rule by a supermajority vote.

The federal deficit under Reagan peaked at 6% of GDP in 1983 falling to 3.2% of GDP in 1987 and to 3.1% …

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