Asked by
Adeyaneira Gonzalez
on Nov 11, 2024
Verified
A disadvantage of functional finance is that it:
A) does not focus on producing the potential level of output in an economy.
B) increases the level of unemployment during recessions.
C) allows chronic deficits that magnify into national debt,allowing it to reach an alarming level.
D) requires that the budget is balanced even during times of war.
E) magnifies fluctuations in the business cycle.
Functional Finance
A budget philosophy using fiscal policy to achieve the economy’s potential GDP, rather than balancing budgets either annually or over the business cycle.
Chronic Deficits
Persistent shortfalls where expenditures exceed revenues over a long period, often leading to increased public debt.
National Debt
The total amount of money that a country's government has borrowed.
- Perceive the consequences of financial policies on the budget gap and national borrowing.
- Recognize the historical trends and policy shifts in U.S. budget deficits and national debt.
Verified Answer
TD
Learning Objectives
- Perceive the consequences of financial policies on the budget gap and national borrowing.
- Recognize the historical trends and policy shifts in U.S. budget deficits and national debt.