I assume that you are talking about the economic stimulus
packages passed by the US government to try to get the US out of the crisis that began
in 2008. If so, the relationship between this stimulus and the deficit is that the
spending for economic stimulus greatly increased the federal government's
deficit.
An economic stimulus typically consists of
increased government spending. The government gives people jobs by spending government
funds on things like road construction. These people (it is hoped) will spend the money
they earn, thereby creating economic activity. This will get the economy through bad
times.
The problem is that this means the government has to
spend a lot of money. It can't raise taxes to get that money (because that would take
money away from people and make them able to buy less in the way of goods and services)
so it has to run a deficit.
As the government spent on
economic stimulus, the deficit exploded. This is the relationship between economic
stimulus and the government's deficit.
No comments:
Post a Comment