Explain how government deficit behaves over the business cycle.
-Does deficit spending help or hurt aggregate demand? Explain.

Question

Quizplus · Accepted Answer

The Answer is Deficit spending may help or hut depending on the economic situation Deficit spending increases money into the economy In moderate amounts, government deficit spending stimulates the economy and may help restore unemployment during a recession If the economy is already at full employment, continued deficit spending cannot increase output and will lead to inflation

Explain How Government Deficit Behaves Over the Business Cycle