Under which situations deficit budget is beneficial for the economy.
Dear Student,
The deficit in budget can be beneficial for the economy if the borrowing so made under such situation is used to finance the capital spending that would further lead to increase in stock of national assets. E.g. Expenditure incurred on health and education would lead to rise in productivity of labour and would have qa positive impact on employment avenues. All the benefits of the expenditure so incurred can be easily ascertained with the help of cost benefit analysis. So, we can say that deficit in budget can be beneficial for the economy if the money so raised by the government is spent wisely.
The deficit in budget can be beneficial for the economy if the borrowing so made under such situation is used to finance the capital spending that would further lead to increase in stock of national assets. E.g. Expenditure incurred on health and education would lead to rise in productivity of labour and would have qa positive impact on employment avenues. All the benefits of the expenditure so incurred can be easily ascertained with the help of cost benefit analysis. So, we can say that deficit in budget can be beneficial for the economy if the money so raised by the government is spent wisely.