Africa's government has increased its spending this year, leading to a growing budget deficit. How will this growing budget deficit affect the economy? Your answer should discuss interest rates, private investment, and aggregate expenditure.
Africa's government has increased its spending this year, leading to a growing budget deficit. How will this growing budget deficit affect the economy? Your answer should discuss interest rates, private investment, and aggregate expenditure.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Africa's government has increased its spending this year, leading to a growing budget deficit.
How will this growing budget deficit affect the economy? Your answer should discuss interest rates, private investment, and aggregate expenditure.
Expert Solution
Introduction:
Budget deficit occurs when the expenditure of the economy exceeds the revenue earned by the economy through trade, taxes etc. It indicates the financial well being of the country.
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