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AURORKA [14]
3 years ago
13

What part does interest play in deficit spending

Social Studies
2 answers:
madam [21]3 years ago
6 0

When a country borrows money in order to fund public spending is incurring into a deficit situation, because the total amount due exceeds the total income generated in a specific time period. Therefore there is deficit spending.

The interest is the price to be paid for the borrowed funds. It is a percentage applied to the total loan amount (called the principal), accruing a quantity that will have to be repaid, together will the principal, to the lender, following a repayment schedule that is usually predefined.

Juli2301 [7.4K]3 years ago
4 0
The correct answer is A : <span>Governments must pay interest on money they borrow when they take on debt. </span>
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