Leaving Cert: reasons why a budget deficit can be a good thing?

george.

hello. I have my economics exam on wednesday and I'm really quite awful at grasping economic theories and what not, so I'm basically trying to learn from past paper questions. Anyway, I was hoping someone might be able to help me out with this question;
Discuss two positive consequences of a gov. current budget deficit

So, I know a deficit is expansionary and stimulates the economy, but im not really sure how to answer this, the marking scheme is two marks per point, and then 3 marks each for explaining the point.

any help would be really appreciated, thank you !

Time Magazine

Nicked from p.19 of this marking scheme:

1. It stimulates the economy
   Through the multiplier, it increases aggregate demand and reduces unemployment.
2. Public sector pay cuts
   Public sector union may be more willing to take pay cuts if they know the government hasn't much money. Similarly the public would be more willing to have taxes raised than if there were a large surplus.
3. May be funding good things
   Paying higher teachers' wages may get better teachers, or it may be funding hiring more nurses which are good for society.

Akrasia

point 4. If you use the budget deficit to buy bigger guns than your neighbour, you can just invade them and take all their money.

george.

thank you very much the economist, for going to the trouble of finding the answer, i should have looked harder!
although tbh, im not sure how well point 4 would go down with the examiner...