Asked by
Gangadhar Chowdary
on Nov 11, 2024
Verified
According to the budget philosophy of functional finance,_____.
A) the budget should be balanced annually
B) surpluses should be run during periods of prosperity and deficits should be run during recessions
C) the government budget should be whatever is necessary to have the economy operate at potential GDP
D) the budget should never be in balance
E) the rate of growth in the national debt should equal the rate of growth in the money supply
Functional Finance
An economic theory that prioritizes achieving full employment and stable prices over balancing budgets.
Potential GDP
The maximum output an economy can produce without causing inflation, when operating at full employment.
Government Budget
A financial statement presenting the government's proposed revenues and spending for a fiscal period, reflecting policy priorities and economic goals.
- Identify the distinctions between yearly, cyclical, and functional equilibrium budgets and their underlying economic reasons.
- Appraise the influence of multiple budgeting approaches on economic consistency and progression.
Verified Answer
LP
Learning Objectives
- Identify the distinctions between yearly, cyclical, and functional equilibrium budgets and their underlying economic reasons.
- Appraise the influence of multiple budgeting approaches on economic consistency and progression.