Are there any situations in which running a budget deficit is justified? Explain
The two primary justifications for running a deficit are wars and recessions. When a military conflict raises government spending it is reasonable to finance the extra spending by borrowing. During a recession, raising taxes or cutting spending to avoid a deficit would reduce aggregate demand at a time when it needs to be stimulated.
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The Social Security Administration estimates that the Social Security Trust Fund will ________ and that the Medicare Trust Fund will ________
A) become fully funded by 2036; become fully funded by 2024 B) continue to get smaller as the number of retirees increases; start to grow once funds from Obamacare are funneled to the program C) grow slowly as more workers retire; decline slowly as medical costs rise D) run out of funds in about 20 years; run out of funds in about 10 years
As a person consumes more of a good, the
A) marginal benefit increases. B) marginal benefit decreases. C) marginal benefit increases or decreases depending whether or not the economy is on the PPF. D) price of the good falls.
Added expenditures in the circular flow that are not paid for out of domestic resource income are known as
a. leakages. b. injections. c. imports. d. infusions.
Which of the following increases the chance of Americans accumulating a large amount of wealth during their lifetimes?
a. Starting to save money early in life b. Investing in the stock market c. Paying bills with cash d. Graduating from high school