The government's present value budget constraint states that
A) taxes must equal government spending in each period.
B) the present value of government spending must be equal to the present value of consumers' disposable incomes.
C) the present value of government spending must be equal to the present value of taxes.
D) the government may run deficits each and every year, as long as the deficits are sufficiently small.
C
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Explain how the government can help the economy avoid a coordination failure
What will be an ideal response?
Transaction and information costs
A) benefit borrowers at the expense of savers. B) benefit savers at the expense of borrowers. C) transaction costs hurt savers while information costs hurt borrowers. D) create profit opportunities for those who can reduce these costs.
TARP
What will be an ideal response?
One reason why present dollars are worth more than future dollars is because income-earning investment opportunities exist.
Answer the following statement true (T) or false (F)