First a quiz:
Q1. The UK economy is just like a household and the government has to finance spending out of its income or through borrowing. True or False?
Q2. The role of taxes is to provide finance for government spending? True or False?
Q3. The UK government needs to borrow money from the private sector to finance the budget deficit. True or False?
Q4. If the Tory/LDs were running a budget surplus instead of a budget deficit, pressure would be taken off interest rates because the private sector would have more funds available for investment projects. True or False?
Q5. If the budget deficit persists it will burden further generations with inflation and higher taxes. True or False?
Q6. We need to run budget surpluses now, to help build up the funds necessary to cope with an ageing population in the future. True or False?
The answer is that…
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