Why do economists view structural budget deficit as a good measure of the direction of the fiscal policy?
What will be an ideal response?
Because it is based on the spending and taxing the government would be doing at some fixed level of GDP, rather than on actual expenditures and receipts, the structural deficit does not depend on the state of the economy. It changes only when policy changes, not when GDP changes. For that reason, most economists view it as a better measure of the thrust of fiscal policy than the actual deficit.
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The above figure shows a graph of the market for pizzas in a large town. No pizzas will be demanded unless price is less than
A) $0. B) $5. C) $12. D) $14.
The long-run effect of rent control on an area includes
A) rampant building of new low-income housing. B) many new luxury apartments new luxury apartments will be built. C) new investors into the real estate market in the area. D) less investment into the real estate market in the area.
Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the real risk-free interest rate and net nonreserve-related international borrowing/lending in the context of the Three-Sector-Model?
a. The real risk-free interest rate rises, and net nonreserve-related international borrowing/lending becomes more negative (or less positive). b. The real risk-free interest rate rises, and net nonreserve-related international borrowing/lending becomes more positive (or less negative). c. The real risk-free interest rate falls, and net nonreserve-related international borrowing/lending becomes more negative (or less positive). d. The real risk-free interest rate and net nonreserve-related international borrowing/lending remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
What characteristic of a competitive market has made the "long run pretty short" in the market for iPhone apps?
A) few firms in the market B) identical products C) ease of entry D) blocked entry