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# Evaluate the impact of a large fiscal deficit and national debt on a country’s economy
- URL: https://www.a-level-economics-tutor.com/evaluate-the-impact-of-a-large-fiscal-deficit-and-national-debt-on-a-countrys-economy/
- Published: 2026-05-20T11:52:20.000Z
- Updated: 2026-06-07T14:32:50.000Z
- Author: Jaisul Naik
- Tags: Edexcel 25 Mark Question

### Edexcel A-Level Economics 25 Mark Question

Japan’s budget deficit for 2017/18 is expected to be 4.6% of GDP. Its national debt is forecast to increase to above 250% of GDP by 2019\. **Evaluate the impact of a large fiscal deficit and national debt on a country’s economy.** (June 2019)

**Plan**

- **Paragraph 1**
  - **Argument: one impact of a large fiscal deficit is faster economic growth due to an increase in spending/ decrease in taxes**
  - **Diagram: increase in AD, multiplier effect**
  - **Evaluation: depends on the state of the economy and trade-offs, possible that economic growth can lead to a fall in the size of a cyclical fiscal deficit**
- **Paragraph 2**
  - **Argument: one impact of high levels of national debt is the need for austerity measures, which would cause a fall in economic growth**
  - **Diagram: decrease in AD, decrease in LRAS**
  - **Evaluation: whether economic growth actually falls depends on which taxes are raised or which spending is cut e.g. if the top rate of income tax is increased, this may have a smaller effect on growth compared to a lower rate of income tax**

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