All of the following are short-term benefits of a budget deficit? A. Stimulating

Question

All of the following are short-term benefits of a budget deficit? A. Stimulating aggregate demand B. Crowding in C. (All options are short-term benefits of a budget deficit D. Crowding out All of the following are short-term benefits of a budget deficit? A. Stimulating aggregate demand B. Crowding in C. (All options are short-term benefits of a budget deficit D. Crowding out A. Stimulating aggregate demand B. Crowding in C. (All options are short-term benefits of a budget deficit D. Crowding out

Explanation / Answer

In the short term, the budget deficit increases the interest rate and crowd out the private investment, it is the harmful effect of the budget deficit. In the short run, the budget deficit stimulates the aggregate demand because government purchase is part of the aggregate demand.

The answer is "A".

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