When the Federal government spends more than it takes in, deficit is the result.

Question

When the Federal government spends more than it takes in, deficit is the result. If deficits continue to occur year after year the government goes into debt. This is called National Debt. There are two basic ways to deal with debt—increase income or decrease spending. In this Discussion, answer any or all of the following questions:

Is fiscal policy responsible for the National Debt?

Should the debt be reduced by increasing taxes or limiting spending?

Should it be a requirement that the Federal Budget be balanced each year?

If a balanced budget were required, would there be any acceptable exceptions?

Explanation / Answer

The fiscal policy helps to overcome National Debt. It helps to induce policies to increase the revenues earned by the companies for the country.
The debt should be reduced initially by limiting spendings such as salaries of employees for a short time interval. There must be increase in trade policy so that it helps to increase the revenues and economy of the nation.
There should be a requirement to balance Federal Budget each year. There would have been acceptable exceptions if monetary policy is also implemented coordinating Fiscal policy.

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