Skip to main content
No. of Recommendations: 0
Guys, I'm just curious how deficits affect things as relevant to the current US economy. Maybe if someone could clarify my thinking, or share their own thoughts. So, I see it as an increasing deficit due to government spending. A big chunk of that comes from military spending right? So for GDP = C+I+G+NX the G increases, so it spurs economic growth in the short run? Please let me know if I made a mistake, it has been a while since I've taken macroecon. However, an increasing deficit is obviously bad in the long run, but how can you explain that in relation to GDP? I'm guessing it affects the exchange rate of the US Dollar too negatively too right?

Thanks ahead of time!
Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.