Since budget deficit has emerged as the major source of concern to economic policy-makers. It has also been a major source of economic controversy, with the different political parties advocating sharply different policies to deal with the problem. The Conservatives have taken the position that the deficit is out of control and needs to be reduced quickly, while Labour has argued that a premature reduction in the deficit will put the recovery at risk and potentially lead to a ‘double-dip’ recession. the election of May 2010 the
In this article we will examine data for the budget deficit and consider its relationship with gross domestic product (GDP). In doing so we will assess the extent to which the current deficit is the result of the fall in tax receipts and increase in government expenditures associated with the recession. This will help us to see whether urgent action needs to be taken to correct the deficit in the short term, or whether the situation will improve naturally as the economy recovers.
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