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What Are The Pros And Cons Of Deficit Spending

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Every time there is an election, there are always promises made (and sometimes not upheld) by politician’s to tackle the nation’s deficit spending. The nation heard the two presidential candidates’ debate the topic frequently during the Presidential debates. The deficit spending is part of what makes up the United States national debt. John Keynes supported the idea of deficit spending during a recession time in our nation. Herbert Hoover was openly against a deficit because it would collapse what our nation was founded on. Deficit spending can turn around a failing economy, but in turn can also take a thriving economy and destroy it.
The deficit spending is when the government purchases or spends more than the amount of money it brings in with the federal income and the corporate taxes. To put it simply, the government spends more than the amount of money that it brings home. A consumer would not be able to survive if they spent beyond their means. A government can do this and call it the deficit spending. The government will spend more on infrastructure in times of low economy and the deficit spending will often times help the economy.
There are many advantages of deficit spending can help turn around an …show more content…

There is not enough financial investment and the government begins to compete with the private sector for this finance because of the government’s deficit spending. The competition between the government and the public sector drives the interest rates which causes financial institutions to invest less which then leads to a fall in the economy. (Thoma, 2011) A fall in the economy means that people will spend less and be more causes which can then in turn cause for more deficit spending to boost the economy. (Hassan, Nassar, Liu,

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