In Which Framework Are Government Surpluses and Deficits Viewed as Being

question 57

Essay

In which framework are government surpluses and deficits viewed as being better (or worse)for the economy-the short run or the long run? Explain.

---

Definitions:

Capital Budgeting Project

A process of evaluating and selecting long-term investments that are expected to generate revenues or reduce costs, aiding in a firm's strategic planning.

Weighted Average Cost of Capital (WACC)

WACC is a calculation of a firm's cost of capital, where each category of capital (debt, equity) is proportionately weighted.

Net Present Value (NPV)

Net Present Value is used to assess the value of an investment by calculating the difference between the present value of cash inflows and the present value of cash outflows over the investment's lifetime.

Normal Cash Flows

A series of fixed cash flows that occur at regular intervals over a projected period.