Question

A. Explain how federal government budget deficits occur and define the public debt.

B. Evaluate circumstances under which the public debt could be a burden to future generations.

C. Analyze the macroeconomic effects of government budget deficits.

D. Describe possible ways to reduce the government budget deficit.

Answer 1

A. The Federal government budget deficit occurs when the revenue expenditure is more than the revenue receipt it means when the expenditure that is maintained in the nation for establishing law and order and the general expenditure on this edition is more than the estimated receipts of the government from tax and non-tax sources.
Republic day it is basically a country take a loan or borrow money to lenders outside of itself it may include individuals, business personalities and the other governments also.
B. There are certain circumstances under which the public that could be a burden to future generation when the percentage of the public that is very high and the government is unable to pay even the interest of the public that then it will become a very difficult situation for the future generation to repay the public there because the multiplication of the rise of this that is very high.
C. The macroeconomic effects of government budget deficits can affect the employment programmes of the government it me Rises the unemployment situation in the economy and it also affects the poverty alleviation programmes of the government because if Debt is so high then it is very difficult for the government to cover up the upcoming economic plans and policies for the development of the nation.
D. The possible way to reduce government budget deficits is as follows.
To repay the interest of the debt on time and to maintain a consolidated fund account to repay the debt on time.
In some situations, to increase the tax rate so that it will give extra income to the government which will help in the reduction of deficits in the government budget.
In some cases, the government should increase non-tax revenue sources that will also help in the repayment of debt.
The rule of the Central Bank is also very important in the repayment of debt and to reduce the government budget deficit.
The government should reduce its expenditure and it is also a very good tool to reduce the government budget deficit.