Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter18: Savings,investment And The Financial System
Section: Chapter Questions
Problem 6QR
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Question
Why might a government budget deficit reduce the economy’s future stock of capital?
Expert Solution
Introduction
The government is said to be having a budget deficit when the total expenditure level incurred by the government exceeds its total receipts level, and therefore the government ends up financing this deficit either by borrowing or minting more money.
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