The Main Problem with the European Stability Pacts of 1999

question 227

True/False

The main problem with the European stability pacts of 1999 and 2011 was that they forced countries to follow contractionary fiscal policies during a recession to keep the budget deficit to the required level.

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Definitions:

Tax Deductions

Expenses that can be subtracted from gross income to reduce taxable income and overall tax liability.

Half-Year Convention

The half-year convention is a tax and accounting principle that allows for depreciation of assets to be calculated as if they had been in service for half a year, regardless of when they were actually acquired during the fiscal year.

Corporate Tax Rate

The share of a company's earnings required to be paid to the government as tax.

Straight Line

A method of calculating depreciation of an asset, where the asset's cost is evenly spread over its useful life.