Government budget deficit, Finance Basics

Government Budget Deficit

If the Government spends much more than it gets in from tax revenue, it runs a budget deficit. This deficit should be covered or financed either via printing more or borrowing money. The US Government has in the past utilized the two ways of financing its deficit in a balanced way. The effect in interest rates is where the deficit is financed through borrowing or printing. The Government would borrow in the S.T market that increase the demand of available funds for lending such subsequently pushes the interest rates up.

If the Government prints much more money it will lead to inflation and the interest rate would eventually rise. Hence the larger the Government deficit, and the higher the level of interest rates.

Posted Date: 1/30/2013 3:04:47 AM | Location : United States







Related Discussions:- Government budget deficit, Assignment Help, Ask Question on Government budget deficit, Get Answer, Expert's Help, Government budget deficit Discussions

Write discussion on Government budget deficit
Your posts are moderated
Related Questions
What are some good examples of C.O.L.A?

Example of Sales Method The balance sheet of XYZ Ltd as on date 31st December 2002 is as following:          Net fixed asset Current assets   F

Profitability Ratio These ratios signify the performance of the firm in relation to its capability to derive returns or profit from investment or from sale of goods that is pr

(a) A couple has just celebrated their 25th wedding anniversary. What is the probability of them celebrating their 50th wedding anniversary, if the husband is aged exactly 50, his

Reasons for Different Interest Rate Interest rates may differ in different market and market segment since: i) Size of the loan: Deposits above specific amounts into the

A firm has the following accounts: What is the net income for the period? Net patient revenue = $1,500,000 Supply expense = $200,000 Depreciation expense = $100,000 Salaries and b

A prospective developer is considering purchasing a site for the construction of a ‘Business Village’ at a price of £750 000. It will provide a let-able office floor space of 17 50

main function of the insurance market

Solutions to the conflict - Relationship between Auditors and Shareholders 1. Firing The auditors may be detached from office at the AGM via the shareholders. 2. Lega

Your daughter is a beginning freshman in high school. By the time she enters her freshman year in college, you would like to have savings accumulated to pay her tuition for her nex