2. Budget philosophies There are several important philosophies regarding budget balances. One way in which they differ is in terms of the time span over which the budget should be balanced. Another difference among budget philosophies involves whether the budget balance is as important as other economic goals. Which of the following budget philosophies advocates ensuring that the economy reaches its potential output? Functional finance Cyclically balanced budget Annually balanced budget A major problem with the implementation of this philosophy is that it: Magnifies business cycle fluctuations Relies upon government officials to budget for surpluses during boom times in order to cover deficits during recessions Can allow the national debt to burgeon with chronic deficits
2. Budget philosophies There are several important philosophies regarding budget balances. One way in which they differ is in terms of the time span over which the budget should be balanced. Another difference among budget philosophies involves whether the budget balance is as important as other economic goals. Which of the following budget philosophies advocates ensuring that the economy reaches its potential output? Functional finance Cyclically balanced budget Annually balanced budget A major problem with the implementation of this philosophy is that it: Magnifies business cycle fluctuations Relies upon government officials to budget for surpluses during boom times in order to cover deficits during recessions Can allow the national debt to burgeon with chronic deficits
Chapter12: Federal Budgets And Public Policy
Section: Chapter Questions
Problem 2.3P
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