It will likely increase the country's short-run economic growth, given that adjustment to increased deficit spending (assuming it is inefficient, in this case) causes a deadweight social loss from redistribution, but lower its long-run growth.
Concept of deficit
inflation, b) deflation c) recession d) economic stagnation
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Deficit financing is a state in which the government spends more money than it receives. This results to borrowing of funds to cover the difference.
deficit financing
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1. Federal Government deficit financing may have a very great influence on monetary and credit conditions.
1. Federal Government deficit financing may have a very great influence on monetary and credit conditions.
Deficit Spending
deficit financing adds to public debt because it is regularly spending more than it takes in each year-and then borrows to make up the difference.
Deficit financing is defined as financing the budgetary deficit through public loans and creation of new money. Deficit financing in India means the expenditure which in excess of current revenue and public borrowing. The government may cover the deficit in the following ways.By running down its accumulated cash reserve from RBI.Issue of new currency by government it self.Borrowing from reserve bank of India and RBI gives the loans by printing more currency notes.
deficit financing adds to public debt because it is regularly spending more than it takes in each year-and then borrows to make up the difference.