When an Economy's Government Goes from Running a Budget Deficit

question 7

True/False

When an economy's government goes from running a budget deficit to running a budget surplus, the economy's long-run growth prospects are improved.

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Definitions:

Inflation Rate

The percentage rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.

Nominal Rate

The interest rate unadjusted for inflation; the face value rate expressed as a percentage.

Real Rate

The interest rate that has been adjusted to remove the effects of inflation, showing the true cost of borrowing.

Economic Rent

A payment made for the use of a good, service, or resource above and beyond what is necessary to encourage its production or supply.