Question

Discuss why the reducing the debt, or balancing the budget, should not be considered during a recession. What are the main causes of our current deficit?

Length of your comment: >100 words.

Answer 1

Answer: Reducing debt- or balancing budget', should not be considered during a recession, main causes of our current deficit: > puring receptions, government spending automatically increased, which raises aggregated demand and off8ets decreases in consume & demand. . Government revenue automatically decreases. the concept of automatic Stabiliser In macro economies, describes how modern government budget policies particularly income tax and welfare sponding. · The size of government budget deficit tends to increase when a country enters a recession, which tends to keep natinal income higher by maintaining aggregate demand. This effect happens automatically depending on Gop

and household income without any explicit policy action by the government and adle to seduce Serenity of recessione Example: . when the country-capes an economic downtown more people become. Unemployed. . As a result more people file for unemployment and other welfare measures, which increases government spending and aggregate demand. • The us federal budget for fiscal year 2018 is $44obillion • The treasury department reported that deficits for 2017 year was $666 Billion. . Revenue was a record 83.3 trillion but spending was also afmost 84 trillion a record at The deficit was lut. higher than prim year.

3 Caries for current deficite : (1) the attacks on g/L led to the war on terror that almost doubled annual military Spending . It rose from $437.4 billion in 2003 to $855.1 billion in 2011. ) mandatory spending has increased that means benefit pay out for Social Security, medicase and other mandatory programs. It exceeded 8 2 million a year since FY 2011. these payment consumes most of revenue each other. package added & the $787 billion economic stimulus to the benefit 2009 deficit. That is because it cut taxes and extended unemployment benefits. It also finded public works project and Create jobs. (4). The secession reduced federal Revenue and Taxes. As the Economy banked, so did tax revenues. - o-