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.Reflationary budgets increase total demand within the economy.llA deflationary or surplus budget where government income exceeds expenditure and total demand is falling within the economy.llA neutral budget where government income and spending are the same and total demand in the economy remains constant.lGovernment BorrowingPublic Sector Borrowing RequirementIf the government spends more than its received income it will have to borrow the difference.The amount the government needs to borrow in a given time period is called the public sector borrowing requirement (PSBR).The PSBR is met by:lSelling National Savings certificates and Premium Bonds.llSelling Treasury bills which are IOUs which will be bought back in ninety-one days; time.llSelling securities, which are IOUs paying interest yearly which will be bought back sometime in the future.Securities are sometimes called gilts, stocks or bonds.lNational DebtThe total amount owed by the government to UK citizens and foreigners at a particular moment in time is called the national debt.The money raised may have been spent on capital goods which increase our ability to produce goods.Interest has to be paid on the debt.A large national debt is a problem if:lInterest has to be paid to overseas citizens, so that the balance of payments suffers.llTaxes have to be increased to meet interest paymentsl [ Pobierz całość w formacie PDF ]