The Effect of Changes in Economic Activity on the Budget

question 42

Multiple Choice

The effect of changes in economic activity on the budget deficit is called:

• A) automatic stabiliser.
• B) debt monetisation.
• C) tax smoothing.
• D) fine tuning.
• E) the structural deficit.

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Definitions:

Glass-Steagall Banking Act

A law enacted in 1933 to establish the Federal Deposit Insurance Corporation (FDIC) and introduce banking reforms to control speculation.

Investment Banking

A sector within banking that deals with the creation of capital for other companies, governments, and other entities, through underwriting or acting as the client's agent in the issuance of securities.

Great Depression

A severe worldwide economic downturn that took place during the 1930s, beginning in the United States and spreading globally.

Gold Standard

A monetary system in which a country's currency or paper money has a value directly linked to gold, allowing for the conversion of currency into a fixed amount of gold.