The background image or a color has to fill the entire screen and then you add margin and padding to the content. Heaving the content too close to the edge of the screen will make it hard to read by the user thus creating bad user experience. Separate the content as much from the border as you can.
Don't use one single image for the background there is no ways you can make it work with all screen resolutions. Instead used small one and use CSS repeat property.
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