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Question:
Write an essay analyzing the advantages and disadvantages of deficit spending and the effects of federal government borrowing on the economy i.e., the "crowding out" effect.
Your paper should be structured as follows
1. Cover page with a running head2. Introduction: What is deficit spending and how does it work.2.1. Advantages2.2. Disadvantages3. Crowding-out Effect4. Conclusions: Do you believe that deficit spending helps or hinders short-term and long-term economic growth?5. References
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This is 800 words paper on deficit financing and its economic consequences. Both advantages and disadvantages of deficit financing are discussed here. Special focus is given on crowding out effect. Crowding out effect is a problem associated with expansionary fiscal policy. It can reduce the effectiveness of investment spending. As a part of expansionary fiscal policy when government increases its spending, it can crowd out private investment. Ultimately it will nullify the impact of expansionary fiscal policy .The referencing is done in APA style.
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