Write a 9 page essay on Macroeconomics-long run effect on budget cutting in the uk.
One of the primary concerns of the governments in UK, both the previous Labour Government and the present government, has been to reduce the public borrowing to sponsor the expenditure of the government (Giudice, Kuenzel and Springbett, 2012). The agenda behind the reduction in the public spending is that it is believed that the economy will grow faster in the medium-term. The simple economics behind the fact is that if business corporations believe that the economy will grow in the medium-term then the confidence in them increases which raises their present level of investment. On the other hand the consumers increase their spending with the belief that the economy will grow in the future. However, the standard component of GDP can be represented as (Mankiw, 2011):