To Force Politicians to Judge Whether Government Spending Is Worth

question 19

Multiple Choice

To force politicians to judge whether government spending is worth the costs, some economists have argued for:

• A) a balanced-budget rule for fiscal policy.
• B) a constant money-growth rule for monetary policy.
• C) avoiding the assumption of any contingent liabilities.
• D) the application of Ricardian equivalence.

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Definitions:

Purchases on Account

Transactions where goods are bought and the payment is deferred to a future date, often recorded in accounts payable.

Supplies Account

An account used in accounting to track the amount spent on supplies that have not yet been used or consumed by the business.

Debit

An accounting entry that results in either an increase in assets or a decrease in liabilities or equity on a company's balance sheet.

Credit

An entry on the right side of a ledger account, representing an increase in liabilities or equity or a decrease in assets; in a broader sense, also refers to the provision of resources by a creditor to a borrower.