If the Government Spends Exactly What It Receives in Taxes

question 26

Multiple Choice

If the government spends exactly what it receives in taxes during a given interval, then the result is

• A) a balanced budget.
• B) the gross public debt.
• C) the net public debt.
• D) a government budget deficit.

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Definitions:

Hedge Effectiveness

A measure of how well a hedge transaction reduces the risk of the exposure that the hedge was intended to protect against.

Economic Relationship

Refers to the interactions between different economic variables or entities, such as the connection between supply and demand or investment and economic growth.

Hedge Ratio

A ratio used to measure the proportion of a position that is hedged, indicating the effectiveness of a hedge against fluctuations.

Fair Value Hedge

A hedge of the exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment, or some component thereof, that is attributable to a particular risk and could affect profit or loss.