Increased borrowing
Inflation
Reduced investment in public services
All of the above
Answer is Right!
Answer is Wrong!
The correct answer is: All of the above.
A high fiscal deficit is a concern because it can lead to:
- Increased borrowing: When the government spends more money than it takes in, it has to borrow money to make up the difference. This can lead to a large national debt, which can be a burden on future generations.
- Inflation: When the government spends more money, it puts more money into circulation. This can lead to inflation, which is a rise in prices. Inflation can make it difficult for people to afford goods and services, and it can also erode the value of savings.
- Reduced investment in public services: When the government has a large budget deficit, it may have to cut back on spending on public services, such as education, healthcare, and infrastructure. This can have a negative impact on the quality of life for citizens.
In addition, a high fiscal deficit can also lead to a loss of confidence in the government, which can make it more difficult for the government to borrow money in the future.