A Major Problem with the Implementation of an Annually Balanced

question 149

Multiple Choice

A major problem with the implementation of an annually balanced budget is that it:

• A)allows the national debt to burgeon with chronic deficits.
• B)relies upon government officials to budget for surpluses during economic booms in order to cover deficits during recessions.
• C)requires annual revenues to match with outlays even during times of war,when there is a sudden increase in military expenditures.
• D)magnifies the fluctuations in the business cycle.
• E)dampens swings in the business cycle.

---

Definitions:

Marginal Benefit

The supplementary value derived from the consumption of an extra unit of a good or service.

Interest-Rate Cost-Of-Funds

This refers to the expense incurred by institutions when borrowing funds, influenced by the current interest rates.

Marginal Cost-Of-Funds

The additional cost of obtaining one more unit of funding.

Investment Projects

Initiatives undertaken by individuals or firms involving the expenditure of resources with the expectation of future financial returns.