If the Government Were to Run a Budget Deficit and Wanted

question 21

Short Answer

If the government were to run a budget deficit and wanted to finance it by printing money, would it have the central bank conduct open market purchases or open market sales?

---

Definitions:

Predetermined Overhead Rates

A rate used to allocate indirect costs to products or projects, calculated at the beginning of an accounting period based on estimated overheads and activity levels.

Activity-based Costing

An accounting method that assigns costs to products or services based on the activities that go into producing them, promoting detailed cost management.

Manufacturing Overhead

Manufacturing overhead includes indirect costs associated with manufacturing, such as maintenance, utilities, and quality control, not directly tied to specific units of production.

Activity Cost Pools

Groups of related costs that are allocated to specific activities using cost drivers in activity-based costing systems.