If a Budget Is Cyclically Balanced,the Government Should Run a Surplus

question 50

True/False

If a budget is cyclically balanced,the government should run a surplus when the economy experiences an expansionary gap.

---

Definitions:

Callable Bond

A bond that the issuer may repurchase at a given call price in some specified period.

Straight Bond

A bond with no option features such as callability or convertibility.

Holding-Period Return

The total return received from holding an asset or portfolio of assets over a specific period, often calculated as the income and capital gains during the period.

Strike Price

The fixed price at which the holder of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying security or commodity.