If the Government Increases Its Budget Deficit,__________ Is Ameliorated If

question 50

Multiple Choice

If the government increases its budget deficit,__________ is ameliorated if the economy has access to __________.

• A)crowding out;foreign savings
• B)crowding out;a money printing press
• C)inflation;household savings
• D)unemployment;the tax structure
• E)lower interest rates;foreign savings

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Definitions:

Exemptions

Provisions in tax law that allow taxpayers to reduce their taxable income, often for specific activities or investments.

Government Borrowing

The method by which a government finances its expenditure by issuing debt instruments, such as bonds.

Public Expenditures

Refers to the spending of government funds on goods, services, and infrastructure for the public benefit and economic stability.

Crowding Out

A situation in which increased public sector borrowing leads to a reduction in private sector spending, either because of higher interest rates or because available financial resources are used by the government.