Which of the Following Describes a Cyclically Balanced Budget

question 21

Multiple Choice

Which of the following describes a cyclically balanced budget?  

• A) Budget deficits during recessions are covered by budget surpluses during expansions. 
• B) Budget deficits ensure that the economy produces at its potential output. 
• C) Budgets are balanced annually, except during war. 
• D) Budget deficits do NOT occur.

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Definitions:

Caravel

A type of small, highly maneuverable sailing ship developed by the Portuguese in the late 15th century, instrumental in exploration and trade.

Feitoria

historical term for Portuguese trade posts or fortresses established from the 15th century onwards across Africa, Asia, and Brazil for trade and to spread Christianity.

Irrigation Systems

Engineered networks of pumps, canals, barriers, and ditches designed to transport water to agricultural fields to support crop growth in areas lacking sufficient rainfall.

Trade Route

Established paths or corridors across land or sea along which goods are transported and traded between different geographic areas or countries.