Which of the Following Might Be a Good Reason for Running

question 65

Multiple Choice

Which of the following might be a good reason for running a budget deficit?

• A) A budget deficit allows for consumption to be more evenly distributed over time,which can be helpful during times of recession.
• B) It puts the repayment burden on future taxpayers,who are always better able to repay the accumulated debt.
• C) It is better than increasing taxes,because budget deficits do not have to be repaid.
• D) It allows for the expansion of entitlement programs to cover more people,thus reducing their financial burdens.
• E) There is never a good reason for running a budget deficit.

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Definitions:

Present Value

Today's monetary value of a forthcoming sum or series of cash flows, after considering a specified rate of return.

Present Value

The current value of a future sum of money or stream of cash flows given a specified rate of return, used in discounting to account for the time value of money.

Future Cash Receipts

Expected incoming cash flows from business operations, investments, or other sources.

Callable Bonds

Securities that the issuer has the right to repurchase before they reach their due date, for a predefined amount.