To evaluate the how national debt is affected by the deficit financing?
Explanation of Solution
National debt is a central government 's cumulative unpaid borrowing, consisting of internal debt (which is due to domestic creditors) and external debt (which is due to international creditors), incurred in funding its spending.
The temporary arrangement of the money to cover its excess revenue by printing more currency generally known as deficit financing but deficit financing will lead to inflation, because deficit financing raises people's money supply and
Therefore all deficits have the effect of rising the economy's future capital resources. the danger would be inflation rather than capital reduction.
Introduction: Financing deficit means raising funds to finance the debt that results from excess spending over revenue. The difference is filled by borrowing from the public by either selling bonds or printing out new money.
Chapter 16 Solutions
Economics Today and Tomorrow, Student Edition
Additional Business Textbook Solutions
Horngren's Accounting (12th Edition)
Financial Accounting (12th Edition) (What's New in Accounting)
Horngren's Accounting (11th Edition)
Managerial Accounting (5th Edition)
Principles of Management
Principles of Accounting Volume 2
- Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSONEngineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education