Budget deficits: Can budget deficits be favorable?

  • Budget deficits can be favorable.

    Budget deficits aren't always a bad thing. If a country needs to spend more money than it makes, it probably has a good reason. This could be in the case of a war or a major development project. Sometimes, it is necessary to spend money for the most important things.

  • No, deficits are bad fiscal policy.

    No, budget deficits are never favorable. Although they might be able to stimulate the economy for a short time, in the end, a deficit must be repaid, and when that happens, the entire economy will suffer. When there is a deficit, public trust in the nation and the nation's credit decreases. Sound fiscal management is much better long-term policy for any nation.

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