According to the Functional Finance Budget Philosophy

question 7

Multiple Choice

According to the functional finance budget philosophy,

• A)deficits should never be used to stimulate the economy
• B)automatic stabilizers should be eliminated
• C)the government budget should be whatever is necessary to have the economy operate at potential GDP
• D)each government spending program should be financed on the basis of its function
• E)the federal budget should be balanced in the long run

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Definitions:

Equipment Depreciation

The reduction in value of equipment over time due to wear and tear or obsolescence.

Supervisory Expense

Costs associated with managing and overseeing employees or departments, not directly tied to production or service delivery.

Overhead Costs

Expenses related to the day-to-day operations of a business that are not directly tied to the production of goods or services, such as rent, utilities, and administrative salaries.

Equipment Depreciation

The process of spreading out the cost of physical assets over their useful lives for accounting and tax purposes.