Suppose the Government Decided to Ensure That Its Structural Budget

question 107

Multiple Choice

Suppose the government decided to ensure that its structural budget deficit was always zero.This policy would be problematic because

• A)it would act as a built-in destabilizer.
• B)it would entail a rising debt-to-GDP ratio.
• C)it would tend to mean that net exports would be crowded out.
• D)it would require continual fiscal expansion.
• E)it would require continual fiscal contraction.

Determine the estimated cost of goods sold.

Compute budgeted accounts payable balance.

Ascertain the budgeted accounts receivable balance.

Estimate the budgeted required production units.

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Definitions:

Marginal Tax Rate

The rate at which the last dollar of income is taxed, indicating how much of an additional dollar earned will be taken in taxes.

Average Tax Rate

The proportion of total income that is paid as tax, calculated by dividing the total amount of tax paid by the total income.

Income Tax Liability

The total amount of income tax that an individual or corporation owes to the government, based on their taxable income.

Marginal Tax Rate

The rate at which the last dollar of income is taxed, representing the tax burden on the next dollar of income.