What are the negative economic consequences of a current budget surplus?

NotExactly

Just a quick Economics question:
What are the negative economic consequences of a current budget surplus?

Gordon Gecko

Unemployment - unemployment may increase due to the economic slowdown
Pay claims - public sector workers may ask for pay increases
Citizens may ask for reduction in taxation

NotExactly

Gordon Gecko wrote: »

Unemployment - unemployment may increase due to the economic slowdown
Pay claims - public sector workers may ask for pay increases
Citizens may ask for reduction in taxation

Thanks for your reply!
How is the economy slowing down if it has a surplus?
The second two aren't really negative consequences?

GoldRush4821

Gordon Gecko wrote: »

Unemployment - unemployment may increase due to the economic slowdown
Pay claims - public sector workers may ask for pay increases
Citizens may ask for reduction in taxation

When you consider what some people in the public sector get away with, you would call that a negative consequence.

AgathaK

Increased inflation due to higher disposable incomes, that lead to high demand for g&s also...

Gordon Gecko

NotExactly wrote: »

Thanks for your reply!
How is the economy slowing down if it has a surplus?
The second two aren't really negative consequences?

Basically with a CBS the government have taken money out of the economy, through taxes usually, and thus there is less consumption. Therefore the economy has slowed down as people don't have as much purchasing power and demand accordingly falls.

Public sector wage demands and citizens asking for lower taxes are generally bad consequences for an economy as things like labour disputes (strikes etc.) are bad for investment and productivity. That said this would be a very tricky question if it were asked as these answers are not immediately obvious. Luckily we've had CBD's since '07 so they are far more likely to be LCQ's this year.
:pac: