Fiscal policy involves government revenue collection and spending to influence the economy. Budget deficits from increased spending or tax cuts may lead to various economic impacts like higher interest rates and reduced consumer spending.
Fiscal policy is the government's use of revenue collection and spending to influence the economy. Budget deficits can impact the economy in various ways. When the government increases spending or cuts taxes to stimulate the economy, it can lead to a higher budget deficit. This can result in consequences such as increased interest rates, reduced consumer spending, and less investment in public infrastructure like roads and hospitals.
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