A Budget Deficit Necessarily Indicates That Fiscal Policy Is Expansionary

question 191

True/False

A budget deficit necessarily indicates that fiscal policy is expansionary.

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Definitions:

Precautionary Motive

The desire to hold cash or liquid assets to guard against unforeseen future needs and emergencies.

Transaction Motive

The need for cash to meet immediate and anticipated demands for payment, a key reason for holding cash in business.

Speculative Motive

The intention to hold cash or other assets in anticipation of future market fluctuations to gain financial advantages.

Collection Float

The time period between when a check is deposited and when the funds become available in the recipient's account, affecting the cash flow and liquidity.