ECONOMIC QUESTIONS

Economic Questions

Economic Questions

Question 1

False

A budget deficit must be financed, and the day to day, the issue of government debt to domestic and foreign investors can do this. In a world where financial capital flows freely between countries, can be relatively easy to finance the deficit. But it may be that if the budget deficit rises to a high level in the medium term, the government may have to offer interest rates to attract enough buyers of government debt. This in turn will have a negative effect on economic growth. Traditionalists argue that a reduction in the budget deficit will help ...