The economists have no doubt that national and per-capita income, production and
economic growth will increase if expansionary fiscal policy is taken with a view of
economic development and decreasing unemployment. The people’s ability of
buying both the local and foreign goods increases along with the increase of
national income. Both the import and trade-deficit of the country will increase if
the demand of the foreign goods increases. Again, the prices of the commodities go
upwards when the government increases the budget deficit by adopting
expansionary fiscal policy and accelerates the public activities through increased
public investment. As a result, the foreigners express their dis-interest in buying
our local goods with relatively high price. So in the international markets our
competitive position goes downwards. It means that the trade-deficit also occurs a
result of expansionary fiscal policy and inflation.

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