Friday, April 24, 2015

Why does America keep spending money if they're in debt?

Why does America keep spending money if they're in debt?
This is a very intricate issue in Economics and often arises in theminds of students,common people alike. In fact, when the country isin debt,they try to squeeze government spending and in such ascenario purchasing capacity of the common people reduces. As aresult, with abundance of supply, there is no purchaser to buythem. When the US economy was in jeopardy in 2008, the Fed Reservepumped billions of dollars so that the economy gets back itsnatural momentum and the American people don't refrain frombuying,thus not affecting the demand-supply rule. Even today, theFed Reserve decided to continue the aid package till February,2014so that unemployment rate falls at reasonable level and dollarbecome strong,inviting FIIs to invest in USA.

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