Budget Deficits Assignment Help Influence of Budget Deficit on Economy

Budget deficit represents a situation in which the budget expenditures of a government are greater than budget receipts.

Generally, government finances budget deficits by borrowing money from the market. A government budget deficit affects the economy in several ways due to impact on corporate tax rate, interest rates, inflation etc. (Madura, 2007). The budget deficit may result to increase in tax rates or cut-down government spending that can influence the economy in negative way. For example given by our Australian budget case study assignment help experts, if a government manage budget deficit by cut-down their spending on public and infrastructure development projects, it will affect growth of the economy (Mankiw, 2011). Along with this case study help, the increase in aggregate demand (AD), interest rates, interest payments of government and inflation rate as well as decrease in size of private sector are also some economic effects of a government budget deficit (Madura, 2007). A budget deficit also affects the consumer consumption due to impact on money supply that slower the economy growth. Additionally, the occurrence of budget deficit can increase the inflation that has negative impact on GDP (Gross Domestic Product) of the country (Sergi & Adekola, 2007).

Examples of Budget Deficits in the United States In last one decade, the United States has run budget deficits in each year. Two time periods of budget deficit are discussed below along with reasons of occurrence.

Fiscal Year 2009 In 2009, the budget deficit was $1,413 billion in the United States that was highest in the history. During this period, the budget deficit of US Federal Government was 10.1% of total GDP (Crutsinger, 2012). The economic recession as well as economic stimulus package by the federal government was the main reasons behind the higher amount of budget deficit during 2009. Along with this, the increase in government spending on military budget for war on terror was also a reason for budget deficit in this period (Tucker, 2010).

Fiscal Year 2010 The United States has also run a budget deficit of $1,294 billion during the year 2010 that was 8.9% of the nation’s economy (Mason & Bull, 2010). There are various reasons that were responsible for budget deficit. Some are as below –

• Increase in government spending due to war against terror.
• The stimulus package of $787 billion to address recession also contributed in budget deficit (Mason & Bull, 2010).

References Crutsinger, M. (2012). US deficit tops $1 trillion for fourth year. Retrieved from http://finance.yahoo.com/news/us-deficit-tops-1-trillion-fourth-011445884–finance.html Madura, J. (2007). Introduction to Business (4^th ed.). USA: Cengage Learning. Mankiw, N.G. (2011). Brief Principles of Macroeconomics (6^th ed.). USA: Cengage Learning. Mason, J & Bull, A. (2010). Obama’s 2010 budget: deficit soars amid job spending. Retrieved from http://www.reuters.com/article/2010/02/01/us-obama-budget-idUSTRE60U00220100201 Sergi, B.S & Adekola, A. (2007). Global Business Management: A Cross-Cultural Perspective. Great Britain: Ashgate Publishing, Ltd. Tucker, I.B. (2010). Survey of Economics (7^th ed.). USA: Cengage Learning.   Get US and Australia US Budget Deficits case study analysis assignment help with our experts. From our US and Australian assignment writing help experts, you will get complete and original assignment help services with recent example and good number of references.