Answer:
All of the above
Explanation:
Deficit in the budget situation where government expenditures are more than government receipts.
Following are the implications of budget deficit
1. It may result in debt trap. As a result the chances of default may increase.
2. It may cause inflationary situation in the economy
3. It increases our future obligations.
4. Deficit in the government budget may result in crowding out effect. It is a situation when interest rate in the economy Increase and private investment spending reduces. It dampens the initial Increase of total investment spending.
Budget deficits occur when government spending exceeds tax revenue. Over an extended period of time, budget deficits can be problematic.
For one thing, budget deficits can lead to crowding out, where increases in government spending lead to corresponding decreases in private investment spending.
Deficits are typically financed with borrowed money. This implies that deficits, in the current time period, increase costs that must be paid in future time periods. Hence, increasing the burden on the economy in the future.
Persistent budget deficits also increase the probability of a nation not being able to repay their debts, which is called default.
Consequently, all of the items here are concerns associated with persistent budget deficits.
