The Key Lesson to Remember About Budget Deficits Is That

question 8

Multiple Choice

The key lesson to remember about budget deficits is that during a recession we should focus on:

• A) what the monetary policy does to the economy and not on what it does to the deficit.
• B) what the fiscal policy does to the economy and not on what it does to the deficit.
• C) what the fiscal policy does to the deficit and not on what it does to the economy.
• D) what the fiscal policy does to the deficit and not on what it does to the national debt.

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Definitions:

Monthly Income

The total income received every month from all sources including salaries, benefits, and investments.

Purchase Bundle

A combination of goods and services that a consumer buys at a given time.

Budget Constraint

Refers to the limitations on the consumption choices of individuals based on their income and the prices of goods and services.

Choice Set

A set of all possible options available to a consumer from which he or she can make a selection.