What effects do you think the national debt and federal budget deficit have on the U.S. economy?
Answer:
Slower growth in the future.
Possibly a financial crisis if we get an extreme-leftist for a president.
The national debt and federal budget deficit have different effects on the US economy depending on what the state of the economy is. The existence of a national debt eliminates the barrier to spending that would happen if the government were restricted to spending only the money it had collected. Such a barrier would cause great disruption of business for companies that provided goods and services to the government. That could be a significant part of our economy.
The existence of the national debt provides the FED the ability to have some control over interest rates.
One alternative to a national debt would be to print more money. This would result in significant inflation. So the national debt is helping to reduce inflation.
This is a question that could be addressed with a PHD thesis and still not be resolved.
Thanks for the opportunity to respond.
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