are the positive and negative aspects of budget deficits and surpluses?
What policy is best for today’s economy? Explain your answer.
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ADVANTAGE- Increased government spending.
NEGATIVE EFFECTS-Inflation, crowding out, increased interest rates,increased borrowing and higher debt interest payments.
POSITIVE EFFECT-Reduced cost of borrowing
NEGATIVE EFFECT-higher taxes and less spending, lower growth rates,higher household debts, reduced government spending on investment.
The best policy would be a budget surplus as it creates a secure future for the country with an increased capacity to borrow funds at a reduced cost.
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