Why Is a Budget Surplus Not Necessarily a Good Thing

question 77

Multiple Choice

Why is a budget surplus not necessarily a good thing?

• A) Saving money is not something a government should do.
• B) It demonstrates a society that is too weak to stand up to the government.
• C) It means the government thinks a recession is coming,so it is storing funds for the crisis.
• D) The surplus money is divided among members of Congress,as a reward for managing the economy well.
• E) It means tax rates may be too high.

---

Definitions:

Japan

A country located in East Asia, known for its rich culture, technological advancements, and economic significance.

Bond

A fixed income instrument that represents a loan made by an investor to a borrower, usually corporations or governmental agencies, which includes the terms of the loan, interest payments, and the time at which the loaned funds must be repaid.

Interest Rate Parity

An economic theory stating that the difference in interest rates between two countries is equal to the expected change in exchange rates between their currencies.

Unbiased Forward Rates

Financial theory suggesting that forward exchange rates should be an unbiased predictor of future spot exchange rates.