Discuss Why Many Economists Maintain That Continued Deficit Spending by Government

question 8

Essay

Discuss why many economists maintain that continued deficit spending by government is likely to "crowd out" (decrease) investment spending in the long run.

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Definitions:

Unit Level Activity

Activities that vary with the number of units produced or sold, directly impacting the cost of goods or services.

Direct Labour-Hours

The total hours worked by employees that can be directly attributed to the production of goods or services.

Overhead Activity

Activities that incur indirect costs, not directly traceable to a product or service but necessary for the production process or service delivery.

Estimated Overhead

An approximation of the expected costs related to manufacturing overhead for a specific period, used for budgeting and costing purposes.