What is the effect of a budget deficit?
Answers:
the word means 'shortage', so it means your gonna be short in your goals or for paying your bills,, bummer eh?
in essence you are sepnding more than you are earning, so the shortfall has to be met from somehwere, either you extort (raise) more tax from your population or you raise more debt
Well, if you're talking about the government's finances.
A deficit it the negative balance that occurs in a given year. The national debt is the accumulation of all deficits that haven't been repaid over a large number of years.
You can learn a lot more about the effects of national debt and deficits by studying macroeconomics. Deficits & debt are caused by fiscal policy - which is set by Congressional spending. Changes to the prime interest rate is monetary policy, and is managed by the US Federal Reserve.
Increased deficit and debt have an inflationary effect on the economy. As deficits and debts go up, you can expect that (assuming no changes in monetary policy) interest rates would go up, the value of the dollar would fall & foreigners would find investments in the US more interesting (not a trivial consideration).
no Dollars to play around with
A budget deficit means that there are not enough funds in the budget to cover the costs incurred, therefore, there is a shortfall. Means there's not enough pennies in the piggy bank.
Gov't spending more that the budgeted amount.
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