Fiscal policy also impacts the amount of taxation on future generations. Government spending that leads to greater deficits means that taxation will eventually have to increase to pay interest. Inversely, when the government runs on a surplus, taxes must eventually be lowered. Tip Use the best acc...
There are two main forces that drive the broad money supply up over time: either banks make more private loans and thus create new deposits, or the government runs large fiscal deficits and has the central bank create new bank reserves to buy large portions of the bond issuance for those de...
There can be different types of budget deficits that can be classified on the basis of types of receipts and expenditures taken into the consideration. These are: Revenue Deficit Fiscal Deficit Primary Deficit Monetised Deficit The Budget surplus is opposite of budget deficit where the revenues excee...
Answer to: Commentators often refer to government budget deficits and trade deficits as twin deficits. Explain how the two types of deficits are...
In Europe a number of German states began experimenting with income taxes in the 1840s, but it was not until the Prussian reforms of 1891 that the income tax became an effective fiscal instrument in any of these states. Thereafter the reform movement spread to other states, and by 1913 the...
of civil servants rather than the results that they are supposed to achieve. The control objective of the administrative budget naturally gives rise to the doctrine that the budget should be balanced. Deficits imply irresponsibility. Surpluses imply the imposition of unwarranted tax burdens on the ...
Assume that all subsequent deficits arise out of loan repayments, and X takes further external loans to finance the deficits at the same terms as the first loan. Also, assume that the infrastructure project starts to yield an annual return of 10% on the initial investment from the third ...
Why is it important to know which type of inflation we may be experiencing? Inflation: Inflation occurs when prices rise at a certain level over a time period. The level of the increase affects the purchasing power of a nation?s currency if not contr...
on the other hand, is the actual shortfall in a country's revenue compared to its spending. A country runs a fiscal deficit when it spends more money than it earns. Fiscal deficits don't include a nation's debts.
hurting the domestic economy and its citizens. Also, many argue that governments should not incur fiscal deficits regularly because the cost ofservicing the debtuses up resources that the government might deploy in more productive ways, such as providing education, ...