Large budget deficits that are consistently run can alter economic trends and put a lot of stress on a nation's banking and financial system.
However, a trend of persistently high budget deficits over time runs the danger of producing a number of undesirable macroeconomic outcomes: a rightward shift in aggregate demand that results in an inflationary rise in the price level; crowding out private investment in tangible assets in a way that impedes economic progress; Several things can result in national budget deficits: Tax reductions that lower revenue, such as those designed to increase major corporations' capacity to add staff. Low gross domestic product (the amount of money made in the nation) leads to low overall revenue, which in turn leads to low tax revenue.
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