Question

With the decrease in the nations deficit does this correlates into new jobs?

Why do you think the economy deficit is decreasing?

When the economy was bad there is enough blame to go around; should someone (or other) get credit for this decrease in the deficit?

Answer 1

A budget is surplus when the government revenue is greater than it expenditure.   The surplus budget does not means that the nation wiped out its unemployment. Experience shows that many of countries have a deficit budget than surplus. A surplus budget before attaining the desirable level of employment is worth nothing.   A surplus budget before full employment only means that the government can save money and can pay off its old debts.

A decreasing deficit or an increase in surplus in budget has the following effects.

1. Increase in tax and lower spending.

To make surplus the government has to reduce its spending or increase the tax rate. The cut in government spending considerably reduce employment opportunities An increase in tax rate will reduce the national consumption. This will badly affect the investment and generation of employment.

2.   Reduce economic growth.

Under budget surplus situations the government forced to cut spending and increase the tax. Both affect aggregate demand negatively and lower growth rate.

The budget surplus does not reduce growth if the economy is in boom. But the surplus must be strong enough to prevent the recession.

A decreasing deficit budget will not create any new employment opportunity. It slow down the generation of new employment since the government is cutting down its expenditure. When the government prefers a decrease in deficit in budget, it has to decrease the expenditure and increase the taxes. The increases in tax accompanied by decrease in expenditure create more unemployment as both decrease aggregate demand. Thus there is no scope that a decreasing budget deficit is a symptom of increasing employment.

We can say that the economies deficit is decreasing by taking the tax imposition and expenditure pattern the countries position in regards to its debt or financial liability. A surplus budget shows that the country is growing economically. The nation is able to pay off its debt. It shows the financial strength of the economy. The increase in tax rate, reduction in government spending indicates that the deficit in budget is decreasing.

As the government able to decrease the deficit the benefit is on the citizens. They will be better of than before. If the deficit is increasing more burden will be placed on the citizens in the form of tax. During time of surplus budget the burden of tax on the people will be less as the government collects less tax and paying off its old debt.