What Are The Advantages And Disadvantages Of Deficit Deficits

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Introduction: Deficit Spending is the practice of spending funds in excess of income, especially by a government or business. It creates both fiscal and trade deficits. A fiscal deficit occurs when a government is borrowing money from other countries to fill a gap or pay down its debts. A trade deficit occurs when a country is importing more trade than they are exporting to other countries for revenue. Advantages: If a country has a time when stocks crash and a recession occurs, it is easier for that country to borrow money from another country and try to refuel their economy. If the country raises taxes it will only further hurt its economy because people are already not spending and you will be cutting their paycheck even more. People will need money to spend. In 2008 in the United States had a recession and the President did a program where he gave a stimulus fund and ask Americans to spend the money and not save it. This was the way to refuel the economy and get the economy and stock market on the rise. It is like restarting an engine on a car. If it breaks down, you want to restart it soon and get it running because without it you cannot get where you need to be to sale your products or move them to locations they are needed. If you go out and buy a new truck or engine and pass your expense on to your customers, they will likely find other means to get their products leaving you with no clients to haul for and further in debt. …show more content…

When a country keeps borrowing money to pay off another debt they are paying interest charges on top of interest charges and this in return makes things they sell or need to collect go up and in a quick way. It can create a compounding effect where one things effects

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