What Is the Rule for Efficient Output Selection and How

question 79

Essay

What is the rule for efficient output selection and how does the competitive market achieve it?

---

Definitions:

Cyclically Balanced

A fiscal policy strategy where government budgets are planned to balance over the business cycle, running surpluses in boom years and deficits during recessions.

Federal Deficits

The financial shortfall that occurs when a government's expenditures exceed its revenues in a given fiscal year.

Great Depression

A severe worldwide economic downturn that took place during the 1930s, marked by devastating economic contraction, high unemployment, and deflation.

Welfare Outlays

Expenditures made by governments aimed at supporting the wellbeing of citizens, including benefits for the unemployed, poor, disabled and elderly.