Public sector finance

what are the types of budget defecit

Cyclical and Budget Defecit

4 sections of business cycle

Boom , Bust , Slowdown , Recovery

what happens during a Boom

increase employment , increase animal spirilts , increase consumption

what happens during bust

increase unemployment

decrease animal spirits

increase savings

what happens to real gdp in the long run

real gdp increases due to long run improvement in technology

why is there increase in budget deficit during recession

decrease real gdp , decrease productivity , decrease demnd for labout , increase unemployment , increase benefits and trainging , decrease tax revenue , increase goverment budget deficit

what is cyclical defecit

a budget defecit during a recession

what is strucutral defecit

a budget defecit remain at every stafe of the business cycle

what is national debt

the total debt built up by the goverment burrowing over time

what is budget defecit

when public expenditure is less than tax revenue

what is UK national debt

over 2 trillion dollars

areas that are affectedby bidget decit and national debt

1. Intrest rates

2. Financial crowding out

3. future generations

how are intrest rates affected by budget defecit and national debt

goverment borrow money , increase demand for borrwoed money , increase price for borrowed money , increase intrest rates

how is financial crowding out affected by budget defecit and national debt

increase intrest rate , decrease invesment from private sector

how are future generation affected by budget defecit and national debt

increase borrowing , increase national debt , increase demand , increase intrest rate for national debt

future generations , more tax and less public expendityre , decrease income and standards of living for future generations