The Government's Present Value Budget Constraint States That

question 4

Multiple Choice

The government's present value budget constraint states that

• A) taxes must equal government spending in each period.
• B) the present value of government spending must be equal to the present value of consumers' disposable incomes.
• C) the present value of government spending must be equal to the present value of taxes.
• D) the government may run deficits each and every year, as long as the deficits are sufficiently small.
• E) governments can increase spending as long as deficits are financed by issuing debt.

---

Definitions:

Tax Bill

A statement from a government authority specifying the amount of tax owed by an individual or entity.

Proration

The allocation or division of financial amounts based on a proportionate distribution, often applied in billing, refunds, or dividends.

Taxable Year

The one-year period that is used for calculating taxes, which can be either a calendar year or a fiscal year.

Property Tax Rate

The percentage of the assessed value of real estate that is payable as tax to the local government.