What should be a future effect upon the economy if a expansionary fiscal policy continues in an economy with an increasing budget deficit and growing national debt?

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Social Studies

Soren Zuniga

5 November, 00:38

What should be a future effect upon the economy if a expansionary fiscal policy continues in an economy with an increasing budget deficit and growing national debt?

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Answers (1)

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Quentin Cruz · Answer 1

Expansionary fiscal policy and budget deficit mean that there will be more money in the economy, but it does not reflect the fact that the economy is stronger that there is actually more value in the economy.

The situation when more money enters but not more goods and producs enter is leading to inflation - this is the correct answer.