deficit spending
Government practice of spending more than it takes in from taxes
Deficit spending is a fiscal policy wherein the government expenditures exceed its revenue or income over a certain period of time. It occurs when the government spends more money than it takes in through taxes, fees, and other forms of revenue. In order to fund its expenditures, the government borrows money by issuing bonds or borrowing from other countries or institutions.
Deficit spending can be used as a tool for economic stimulus during a recession or depression. By increasing government spending, more money is injected into the economy, resulting in increased demand and job creation. This can lead to greater economic growth in the long run.
However, deficit spending also has its drawbacks. It can lead to higher levels of national debt, which can be a burden on future generations. Additionally, it can lead to inflation, as more money is being circulated in the market.
In conclusion, deficit spending can be an effective tool for economic stimulus, but it must be managed carefully to ensure that it does not lead to long-term negative consequences.
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