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Government deficit spending

Definition

Government deficit spending occurs when a government spends more money than it collects in revenue during a specific period. It leads to budget deficits and increases the national debt.

Related terms

National debt: The national debt represents the cumulative amount of money owed by a government due to past deficits.

Fiscal policy: Fiscal policy refers to how governments use taxation and government spending to influence the overall economy.

Crowding out effect: The crowding out effect occurs when increased government borrowing leads to higher interest rates and reduces private sector investment.

"Government deficit spending" appears in:

Study guides (1)

  • AP Macroeconomics - 5.3 Money Growth and Inflation

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About Us

About Fiveable

Blog

Careers

Code of Conduct

Terms of Use

Privacy Policy

CCPA Privacy Policy

Resources

Cram Mode

AP Score Calculators

Study Guides

Practice Quizzes

Glossary

Cram Events

Merch Shop

Crisis Text Line

Help Center

© 2024 Fiveable Inc. All rights reserved.

AP® and SAT® are trademarks registered by the College Board, which is not affiliated with, and does not endorse this website.