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Economic Theories Of Deficit Spending

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When the country falls into recession, the government follows numerous economic theories that could help the country fall out of recession or bring the economy to the current or better standing. One method the government uses is deficit spending. The name deficit spending doesn't really have a positive ring to it, and to be completely accurate the definition is; when purchases exceed income. However it is necessary for the government to fall into deficit spending when the country falls into recession. The reason why is, because when the government spends excessively; the money is usually spent on important things for the good of the country, which results in economic growth. How, can an excess spending work in the favor of the economy is obviously the question that comes to mind. The answer is that it …show more content…

When the government for instance buys buildings, medical equipments and so on, the business it is incontact with needs to hire more people, not to mention the government also hires people the more they buy, therefore it results in job creation for many. In conclusion, budget deficits in relations to the government is administered intentionally, because in the end it will bring about a positive outcome; as it will pull it out of recession and provide a new beginning for the nation's economy. The answer for this question is real simple. It does not fit with monetarists theory but goes hand in hand with keynesians theory. For the monetarists theory the deficits spending method to boost up economic growth is the exact opposite of what the the theory stands for, which is against excessive spending. Keynesians believe that when the country is in distress, the government should do whatever is necessary because , not doing anything about it; will push it further down, making recovery even more impossible than it already

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