What is the impact of a balanced budget on the economy?
Practice Questions
Q1
What is the impact of a balanced budget on the economy?
Stimulates economic growth
Reduces public debt
Increases inflation
Decreases government services
Questions & Step-by-Step Solutions
What is the impact of a balanced budget on the economy?
Step 1: Understand what a balanced budget means. It is when the government spends the same amount of money that it earns in revenue.
Step 2: Recognize that a balanced budget can help reduce public debt. This means the government does not borrow money, which keeps debt levels lower.
Step 3: Realize that maintaining a balanced budget can lead to fiscal stability. This means the economy is more stable and predictable.
Step 4: Consider how a balanced budget can affect public services. If the government spends wisely, it can provide good services without going into debt.
Step 5: Think about the long-term effects. A balanced budget can lead to a healthier economy, as it encourages responsible spending and saving.
