Importance of Government Deficit Spending and Growth of Domestic Products (Essay Sample)

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Government Spending
The two main aspects of government spending are the management of government deficits and the growth of domestic products, both of which are critical elements of economic policymaking (Wang, 515). The importance of government deficit and the growth of domestic products have become more prevalent in recent years, especially after the major economic downturns that have affected the U.S. and other major global economies in Europe (Hassan, Raja, and Liu, 105). Nonetheless, despite the significance of these topics, an analysis of contemporary literature on government spending reveals mixed opinions among scholars. For example, some argue that government deficits hurt the Gross Domestic Product (GDP) through increasing interest rates and reducing investment in local businesses (Wang, 522). On the other hand, some argue that government deficit spending can be helpful for governments, especially during economic recessions, because it helps to boost demand without impacting the prevailing interest rates (Wang, 527).
Nevertheless, the accurate picture of the impact of government deficit spending can only be seen through a more detailed analysis of variables such as unemployment, interest rates, and inflation to determine how the deficit affects GDP (Wang, 535). Based on these parameters, a recent study of the impact of government deficit spending on the GDP in the U.S. shows that the deficit had a negative impact on the GDP (Hassan, Raja, and Liu, 107). On the other hand, the country's infl