In Which of the Following Situations Does the Government NOT

question 70

Multiple Choice

In which of the following situations does the government NOT need to balance its budget?

• A) if nominal GDP grows faster than the growth in debt
• B) if nominal GDP grows slower than the growth in debt
• C) if inflation is zero
• D) if inflation is higher than the growth in debt

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Definitions:

CCA Class

A grouping in Canadian tax law under the Capital Cost Allowance, determining the rate at which assets can be depreciated for tax purposes.

Discount Rate

The interest rate used to discount future cash flows to their present value, significant in determining the attractiveness of an investment.

Tax Rate

The percentage at which an individual or corporation is taxed, which can vary based on income level, type of income, and other factors.

CCA Class

Canadian Controlled Private Corporation (CCA) Class refers to a system of categorizing assets for tax depreciation purposes in Canada, allowing businesses to claim the cost of capital assets over time.