In the Long-Run Framework, Budget Surpluses

question 64

Multiple Choice

In the long-run framework, budget surpluses:

• A)should be run whenever output dips below potential output.
• B)should never be run since they crowd out investment in the short run.
• C)are better than budget deficits over the long run because unlike budget deficits, they increase saving and investment.
• D)should be run on a permanent basis since they boost saving and investment and stimulate economic growth.

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Definitions:

Total Fixed Costs

The total of all expenses that do not change, irrespective of the amount of production or the level of business operations.

Workers

Workers refer to individuals engaged in any form of employment or labor, contributing their skills and efforts in exchange for compensation.

Variable Costs

Costs that vary directly with the level of production or sales, such as materials and labor.

Total Cost

The sum of all costs incurred by a business in producing a good or service, including both fixed and variable costs.