Policies do to the budget deficit and the national debt

Reference no: EM13695956

The economy has been suffering through a recession for over a year and the government is desperate for solutions. Elections are coming up and the current administration is in danger of being replaced if something isn’t done to stimulate the economy fast.

1. What types of fiscal policies can the government engage in to increase consumption? Why might these policies be ineffective? Why might increasing investment be a better target?

2. What will these policies do to the budget deficit and the national debt? Assuming the government borrows from domestic sources what impact will this borrowing have on the economy in the short run? In the long run?

Reference no: EM13695956

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