Which Allocation of the Budget Surplus Would Lead to a Slow

question 55

Multiple Choice

Which allocation of the budget surplus would lead to a slow accumulation of the nation's capital stock-eventually causing increases in consumption?

• A) Using the surplus to reduce the national debt
• B) Using the surplus to increase government spending levels
• C) Using the surplus to pay for new government programs.
• D) Using the surplus to increase taxes

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Definitions:

Investment

An investment is the allocation of money or capital to purchase financial instruments or other assets to gain profitable returns as interest, income, or appreciation of the value of the instrument.

Accumulate

To accumulate is to gather or collect something over a period of time, often used in financial contexts to describe the building up of interest, investments, or assets.

Compounded Quarterly

A method of calculating interest where the interest earned each quarter is added to the principal, thereby increasing the amount on which subsequent interest is calculated.

Interest Rate

The percentage of a loan amount that is applied as interest for the borrower, usually shown as an annual rate of the remaining loan balance.