Differentiate between deficit and debt, identify some concerns surrounding deficit and debt in popular media at...

Differentiate between deficit and debt, identify some concerns surrounding deficit and debt in popular media at the national level. Discuss if these particular concerns are or are not the major issues about which we should worry.
Many economists believe that deficit spending will reduce the national income in the long run. Yet, popular fiscal policy theory argues that deficit spending is what should be used to reduce the impact of a recession or business slowdown in the short run. Are these theories contradicting? Do we use different policies to stabilize the economy in the short and long run?
If Keynesian economists recommend deficit spending as expansionary, does it stand to reason that a surplus budget would be recessionary or contractionary? What then is the likely outcome of paying down the federal debt?

Expert Solution

Rahul Sunny answered 2 years ago

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